Asian Shares Mostly Higher; Chinese Markets Buck Trend

Asian stocks followed their U.S. peers higher on Thursday, although Chinese and Hong Kong stocks ended on a subdued note on news of extended lockdowns in the Chinese city of Chengdu.

A cautious undertone prevailed as investors awaited the ECB rate decision and remarks by U.S. Federal Reserve Chair Jerome Powell.

Powell will participate in a discussion at a Cato Institute conference, where the rhetoric on rate hikes is expected to remain hawkish overall.

The dollar came off from 20-year highs and bond yields eased, while oil prices rose in Asian trading after falling to levels not seen since before Russia’s invasion of Ukraine overnight on demand concerns.

The rebound came after Russian President Vladimir Putin threatened to stop supplying gas and oil if price caps are imposed on Russia’s energy resources.

China’s Shanghai Composite Index slipped 0.3 percent to 3,235.59 as heavy rains complicated earthquake recovery efforts in southwestern China.

The Chinese megacity of Chengdu extended a lockdown for a majority of its more than 21 million residents, as the caseload remained elevated. Hong Kong’s Hang Seng Index ended 1 percent lower at 18,854.62.

Japanese shares led regional gains to end at a one-week high as the yen’s rapid depreciation raised hopes for a better outlook for exporters.

The Nikkei 225 Index soared 2.3 percent to 28,065.28, marking its biggest single-day gain in four weeks and the highest closing level since August 31. The broader Topix closed 2.2 percent higher at 1,957.62, snapping a six-session losing streak.

Heavyweights SoftBank and Fast Retailing both rose over 2 percent. Tech stocks such as Advantest, Tokyo Electron and Screen Holdings gained 1-2 percent.

ANA Holdings added 2.5 percent and Japan Airlines jumped 3.6 percent after the government further eased its COVID-19 border control measures.

Official data showed earlier today that Japan’s economy grew more than initially estimated in the second quarter as a result of increased capital expenditure by businesses.

Seoul stocks eked out modest gains to rebound from a seven-week low hit the previous day, as the dollar rally paused and Treasury yields eased. The Kospi rose 0.3 percent to close at 2,384.28 ahead of a long holiday weekend.

South Korea’s financial markets will be closed on Friday through next Monday for local holidays.

Australian markets rose the most in 10 weeks after RBA Governor Philip Lowe said the Board was not on a pre-set path and there is a case for a slower pace of rate hikes.

The benchmark S&P/ASX 200 Index surged 1.8 percent to 6,848.70 after two straight sessions of losses. The broader All Ordinaries Index ended 1.8 percent higher at 7,085.30.

Higher iron ore prices helped lift miners, with Fortescue Metals Group spiking nearly 5 percent.

Payments platform Tyro skyrocketed 27.9 percent after rejecting an unsolicited takeover offer from private equity firm Potentia Capital Management and a group of investors.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 Index jumped 1.1 percent to 11,677.93.

U.S. stocks rose sharply overnight, as oil prices slumped and Treasury yields pulled back, helping cool investor concerns about inflation and interest rate hikes.

Investors also reacted to the Fed’s Beige Book report showing a weak growth outlook and Fed Vice Chair Lael Brainard’s comments on bringing inflation down without going too far.

The tech-heavy Nasdaq Composite rallied 2.1 percent to snap a seven-day losing streak, while the Dow climbed 1.4 percent and the S&P 500 added 1.8 percent.

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