Asian stock markets are trading mostly higher on Wednesday, buoyed by mixed signals from Wall Street overnight. Investors remain optimistic about the direction of interest rates as they cautiously await the U.S. Federal Reserve's upcoming monetary policy announcement. Asian markets had closed mostly lower on Tuesday.
While it is widely anticipated that the Fed will maintain the current interest rates, traders are focused on the accompanying statement for hints regarding a potential rate cut in September. According to the CME Group's FedWatch Tool, there is an 87.7% likelihood of a quarter-point cut and an 11.9% chance of a half-point reduction next month.
Australian shares are seeing robust gains on Wednesday, recovering the losses from the previous session. The S&P/ASX 200 index has surged past the 8,000 mark, supported by positive cues from Wall Street and widespread gains across various sectors, including technology and mining.
The S&P/ASX 200 Index has risen by 94.50 points, or 1.19%, to 8,047.70, after reaching a high of 8,061.60 earlier. Meanwhile, the broader All Ordinaries Index is up 96.60 points, or 1.18%, to 8,273.20. Australian stocks had notably declined on Tuesday.
In the mining sector, Fortescue Metals has gained over 2%, Rio Tinto is up nearly 1%, and Mineral Resources is advancing by 0.4%. However, BHP Group is down by 0.2%.
Oil stocks are mostly charting higher territory. Santos and Beach Energy are up by between 0.1% and 0.4%, while Woodside Energy has gained almost 1%. Conversely, Origin Energy is down by more than 3%.
In the tech sector, Block (Afterpay's parent company) is up 0.2%, Appen has surged over 5%, while WiseTech Global and Xero are both gaining more than 1% each. Meanwhile, Zip is down 2.5%.
Among the major banks, Commonwealth Bank is up 0.4%, while ANZ Banking, National Australia Bank, and Westpac are gaining nearly 1% each.
Gold miners are showing mixed results: Resolute Mining is up by more than 1%, while Newmont and Evolution Mining are each up by 0.3%. Gold Road Resources has declined nearly 6%, and Northern Star Resources remains unchanged.
On the economic front, the Australian Bureau of Statistics (ABS) reported that consumer prices rose by 1.0% in the second quarter of 2024, consistent with expectations. Annual inflation rose to 3.8%, matching forecasts and up from 3.6% in the previous quarter. The Reserve Bank of Australia's trimmed mean rose by 0.8% quarter-on-quarter and by 3.9% year-on-year, with the weighted median adding 0.8% and 4.1%, respectively.
Retail sales in Australia increased by a seasonally adjusted 0.5% month-on-month in June, beating forecasts of a 0.2% rise and following a 0.6% increase in May. Annual sales rose by 2.2%. However, retail sales volume for the second quarter of 2024 fell by 0.3% quarter-on-quarter, continuing a downward trend from the prior three quarters, and decreased by 0.6% year-on-year.
According to the Reserve Bank of Australia, private sector credit in Australia rose by 0.6% month-on-month in June, surpassing the 0.4% forecasted. On a yearly basis, private sector credit climbed by 5.6%.
In currency markets, the Aussie dollar is trading at $0.650 on Wednesday.
The Japanese stock market is notably lower on Wednesday, paring back some of the gains from the previous two sessions due to mixed cues from Wall Street. The Nikkei 225 has fallen well below the 38,400 level, with declines in index heavyweights, exporters, and technology stocks partially offset by gains in financial stocks.
The Nikkei 225 Index closed the morning session at 38,369.54, down 156.54 points, or 0.41%, after hitting a low of 37,954.38 earlier. Japanese stocks had ended modestly higher on Tuesday.
Market heavyweight SoftBank Group has lost nearly 4%, while Uniqlo operator Fast Retailing is down 0.3%. Among automakers, Honda is down almost 1%, and Toyota has declined by over 2%.
In the tech sector, Advantest is down 0.1%, while Screen Holdings and Tokyo Electron are each down by more than 1%.
In the banking sector, Mizuho Financial is up nearly 3%, while Sumitomo Mitsui Financial and Mitsubishi UFJ Financial are each gaining more than 2%.
Among major exporters, Sony is down nearly 2%, Mitsubishi Electric has declined by over 1%, and Canon is down 0.1%. Meanwhile, Panasonic has gained over 1%.
Oriental Land is experiencing a significant drop, falling nearly 10 percent. Murata Manufacturing is down nearly 5 percent, while ANA Holdings has decreased by more than 3 percent. Companies such as Kao, Mitsubishi Motors, Mercari, Eisai, Keisei Electric Railway, and Shiseido are all seeing declines of approximately 3 percent.
On the positive side, TDK is up by over 3 percent, and both Japan Post and Resona have gained nearly 3 percent each.
In economic updates, the Bank of Japan will conclude its monetary policy meeting on Wednesday and is expected to announce its decision on interest rates. The BoJ is anticipated to maintain its benchmark lending rate at 0.10 percent.
Retail sales in Japan rose 3.7 percent in June on a seasonally adjusted basis, reaching 13.678 trillion yen, as reported by the Ministry of Economy, Trade and Industry (METI). This surpasses the expected 3.3 percent increase and follows a 2.8 percent rise in May. Monthly retail sales increased by 0.6 percent. For Q2 2024, retail sales grew 1.8 percent quarterly and 2.8 percent year-over-year, totaling 40.632 trillion yen.
However, industrial output in Japan dropped by a seasonally adjusted 3.6 percent in June, exceeding the forecasted decline of 4.2 percent after a 3.6 percent rise in May. Annually, industrial output fell by 7.3 percent, reversing a 1.1 percent increase from the previous month. Following this data release, the METI revised its assessment of industrial production, noting its inconsistent performance and overall weakening.
In the currency market, the U.S. dollar is trading in the upper range of 152 yen on Wednesday.
In other Asian markets, Hong Kong and China posted gains of 1.5 percent and 1.2 percent respectively. New Zealand, Singapore, South Korea, Malaysia, Taiwan, and Indonesia saw increases ranging between 0.1 and 0.4 percent.
On Wall Street, stock indexes had divergent movements on Tuesday. The tech-heavy Nasdaq sharply declined, while the Dow ended positively. The Nasdaq fell by 222.78 points or 1.3 percent to 17,147.41, marking its lowest close in over a month. The S&P 500 also dropped by 27.10 points or 0.5 percent to 5,436.44, whereas the Dow rose by 203.40 points or 0.5 percent to 40,743.33.
European markets presented a mixed performance. The U.K.'s FTSE 100 Index fell by 0.2 percent, while France's CAC 40 Index and Germany's DAX Index increased by 0.4 percent and 0.5 percent, respectively.
Crude oil prices decreased on Tuesday due to ongoing concerns about demand and ahead of the Federal Reserve's monetary policy announcement and weekly inventory data. West Texas Intermediate crude oil futures for September fell by $1.08 or 1.42 percent, settling at $74.73 per barrel.
