Asian Markets Track Wall Street Higher

Asian stock markets are trading mostly higher on Tuesday, following the broadly positive cues from Wall Street overnight, as markets react to remarks by US Fed Chair Jerome Powell, who suggested the central bank will continue to lower interest rates but stressed the downward path for rates is not on a preset course. Asian markets closed mixed on Monday.

Powell’s remarks partly offset optimism the Fed will continue to lower interest rates aggressively in the coming months.

The Fed’s next monetary policy meeting is scheduled for November 6-7, with CME Group’s FedWatch Tool currently indicating a 65.3 percent chance the central bank will lower rates by 25 basis points and a 34.7 percent chance of another 50-basis point rate cut.

Reversing the gains in the previous three sessions, the Australian stock market is trading notably lower on Tuesday, despite the broadly positive cues from Wall Street overnight. The benchmark S&P/ASX 200 is falling to near the 8,200 level, with weakness in mining and financial stocks partially offset by gains in technology and energy stocks.

The benchmark S&P/ASX 200 Index is losing 58.00 points or 0.70 percent to 8,211.80, after hitting a low of 8,209.90 earlier. The broader All Ordinaries Index is down 53.30 points or 0.62 percent to 8,485.10. Australian stocks closed notably higher on Monday.

Among the major miners, BHP Group is losing almost 2 percent, while Rio Tinto, Mineral Resources and Fortescue Metals are declining 2.5 percent each.

Oil stocks are mostly higher. Origin Energy is edging up 0.3 percent, while Woodside Energy and Santos are gaining almost 1 percent each. Beach energy is flat.

Among tech stocks, Appen is soaring more than 9 percent and WiseTech Global is gaining almost 1 percent, while Afterpay owner Block and Xero are edging up 0.3 percent each. Zip is edging down 0.4 percent.

Gold miners are mostly lower. Gold Road Resources is losing 2.5 percent, Evolution Mining is down more than 1 percent, Newmont is edging down 0.3 percent, Resolute Mining is slipping almost 2 percent and Northern Star resources is declining almost 1 percent.

Among the big four banks, Commonwealth Bank is losing almost 1 percent and Westpac is down more than 1 percent, while ANZ Banking and National Australia Bank are edging down 0.2 to 0.5 percent each.

In other news, shares in Sigma Healthcare are rallying more than 13 precent after saying it would bring in data-sharing rules to help alleviate concerns by the regulator regarding its proposed $700 million merger with Chemist Warehouse.

Shares in Qantas are slipping almost 4 percent after rival airline Qatar Airways moved to buy a 25 percent stake in Virgin Australia.

Shares in REA Group are slipping more than 4 percent after confirming it would abandon bidding for Rightmove after the UK-listed real estate site knocked back REA Group’s fourth bid in a matter of weeks.

In economic news, the manufacturing sector in Australia continued to contract in September, and at a faster rate, the latest survey from Judo Bank revealed on Tuesday with a manufacturing PMI score of 46.7. That’s down from 48.5 in August and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

The Australian Bureau of Statistics or ABS, said total number of building permits issued in Australia was down a seasonally adjusted 6.1 percent on month in August – coming in at 13,991 consents. That missed forecasts for a decline of 4.3 percent following the upwardly revised 11.0 percent spike in July (originally 10.4 percent). On a yearly basis, permits were up 3.6 percent. The value of total building approved fell 0.2 percent to A$13.25 billion following a 6.9 percent rise in July.

The ABS also said the value of retail sales in Australia was up a seasonally adjusted 0.7 percent on month in August, the Australian Bureau of Statistics said on Tuesday – coming in at A$36.474billion. That beat forecasts for a gain of 0.4 percent following the upwardly revised 0.1 percent increase in July (originally flat). On a yearly basis, retail sales rose 3.1 percent.

In the currency market, the Aussie dollar is trading at $0.693 on Tuesday.

Rebounding from the sharp losses in the previous session, the Japanese stock market is sharply higher on Tuesday, with the Nikkei 225 moving well above the 38,500 level, following the broadly positive cues from Wall Street overnight, with gains across all the sectors led by index heavyweights and technology stocks.

The markets react to incoming PM Shigeru Ishiba’s support for the Bank of Japan’s moves to raise interest rates from their near-zero level and also backed other policies, such as possibly raising corporate taxes.

The benchmark Nikkei 225 Index closed the morning session at 38,476.33, up 556.78 points or 1.47 percent, after touching a high of 38,621.94 earlier. Japanese shares ended sharply lower on Monday.

Market heavyweight SoftBank Group is gaining almost 3 percent and Uniqlo operator Fast Retailing is adding almost 2 percent. Among automakers, Honda is gaining more than 2 percent and Toyota is adding almost 2 percent.

In the tech space, Advantest is gaining almost 2 percent, Screen Holdings is advancing almost 3 percent and Tokyo Electron is adding more than 3 percent.

In the banking sector, Mitsubishi UFJ Financial, Sumitomo Mitsui Financial and Mizuho Financial are gaining 2.5 percent each.

The major exporters are mostly higher. Canon is adding almost 2 percent and Mitsubishi Electric is adding more than 1 percent, while Panasonic and Sony are edging up 0.2 to 0.5 percent each.

Among the other major gainers, Kawasaki Heavy Industries is soaring more than 8 percent and Mitsubishi Heavy Industries is surging almost 7 percent, while IHI and Japan Steel Works are advancing more than 7 percent each. TDK and Ebara are gaining more than 5 percent each, while Fujikura and Nitto Denko are adding more than 4 percent each. Nomura Holdings, Disco, Japan Exchange Group, Hitachi and Isetan Mitsukoshi are rising almost 4 percent each. Socionext is up more than 3 percent.

Conversely, there are no other major losers.

In economic news, the unemployment rate in Japan came in at a seasonally adjusted 2.5 percent in August, the ministry of Internal Affairs and Communications said on Tuesday. That was below expectations for 2.6 percent and down from 2.7 percent in July. The jobs-to-applicant ratio was 1.23, which missed forecasts for 1.24 – which would have been unchanged from the previous month. The articipation rate ticked up to 63.6 percent from 63.5 percent a month earlier.

The latest survey from Jibun Bank revealed that the manufacturing sector in Japan continued to contract in September, and at a faster rate, with a manufacturing PMI score of 49.7. That’s down from 49.8 in August and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

Meanwhile, the Bank of Japan’s quarterly Tankan Survey of business sentiment showed large manufacturing in Japan was steady in the third quarter of 2024, with a diffusion index score of +13. That beat forecasts for a reading of +12 and was unchanged from three months ago. The outlook came in at +14, matching expectations and steady from the previous quarter.

The large non-manufacturers index came in at +34, beating forecasts for +32 and up from +33. The outlook was +28, down from +34 three months earlier. The medium manufacturing index was at +8 with an outlook of +9, while the medium non-manufacturing index was at +23 with an outlook of +16. The small manufacturing index was at 0, while the small non-manufacturing index was at +14.

In the currency market, the U.S. dollar is trading in the higher 143 yen-range on Tuesday.

Elsewhere in Asia, New Zealand, Malaysia, Taiwan and Indonesia are higher by between 0.2 and 0.5 percent each, while Singapore is down 0.2 percent. China is closed for Mid-Autumn Festival and National Day, Hong Kong is closed for National Day and South Korea is closed for Armed Forces Day.

On Wall Street, stocks showed a lack of direction over the course of the trading session on Monday before eventually ending the day mostly higher. The major averages all finished the day in positive territory following the mixed performance seen last Friday.

The Dow inched up 17.15 points or less than a tenth of a percent to a new record closing high of 42,330.15, while the Nasdaq climbed 69.58 points or 0.4 percent to 18,189.17. The S&P 500 also rose 24.31 points or 0.4 percent to a new record closing high of 5,762.48.

Meanwhile, the major European markets all moved to the downside on the day. While the French CAC 40 Index tumbled 2.0 percent, the U.K.’s FTSE 100 Index slumped by 1.0 percent and the German DAX Index slid by 0.8 percent.

Crude oil prices settled flat on Monday as uncertainty about the outlook for oil demand from China weighed on prices. West Texas Intermediate Crude oil futures for November ended down $0.01 at $68.17 a barrel.

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