Asian Markets Trading Mostly Higher

Asian stock markets are trading mostly higher on Tuesday with most of the markets in the region being closed for Lunar New Year holidays, following the broadly positive cues from Wall Street overnight, on the continued spike in crude oil prices and as traders shrugged off concerns about inflation and picked up stocks at a bargain after the recent big sell-off amid optimism about growth. Asian stocks ended mostly higher on Monday.

Traders have also been cautious and reluctant to make significant moves ahead of monetary policy decisions by the Reserve Bank of Australia, the European Central Bank and the Bank of England this week.

The Australian stock market is trading modestly higher in a choppy session on Tuesday, recouping the losses in the previous session, with the benchmark S&P/ASX 200 just below the 7,000 mark, following the broadly positive cues from Wall Street overnight, as traders cautiously await cues from the Reserve Bank of Australia meeting later in the day.

The RBA, which will hold its first meeting of the year on Tuesday, is expected to end its bond buying program amid high inflation. The central bank is expected to end its extraordinary monetary stimulus, upgrade its economic forecasts and potentially bring forward its interest-rate guidance.

Concerns over the domestic Covid-19 cases have softened as the daily new cases are on a steady decline. New South Wales reported 12,818 new cases and 30 deaths on Monday and Victoria also reported 11,311 new cases and 34 deaths. Queensland recorded 7,588 new cases and ten deaths, ACT reported 522 new cases, South Australia reported 1,266 new cases and Tasmania reported 699 new cases.

The benchmark S&P/ASX 200 Index is gaining 17.50 points or 0.25 percent to 6,989.10, after touching a high of 7,022.90 and a low of 6,945.70 earlier. The broader All Ordinaries Index is up 24.50 points or 0.34 percent to 7,292.80. Australian stocks closed modestly lower on Monday.

Among the major miners, Rio Tinto is losing more than 2 percent, BHP Group is declining almost 3 percent and Fortescue Metals is down almost 1 percent, while Mineral Resources is gaining more than 2 percent. OZ Minerals is flat.

Oil stocks are mostly higher. Origin Energy is gaining almost 3 percent, Santos is edging up 0.3 percent and Beach energy is adding almost 1 percent, while Woodside Petroleum is edging down 0.5 percent.

Among the big four banks, Westpac is edging up 0.5 percent, National Australia Bank is gaining more than 1 percent and ANZ Banking is edging up 0.1 percent, while Commonwealth Bank is edging down 0.3 percent.

Among tech stocks, Appen and Zip are surging almost 7 percent each, while Xero is gaining 2.5 percent and WiseTech Global is adding almost 2 percent..

Gold miners are mostly higher. Northern Star Resources is gaining almost 2 percent, Evolution Mining is adding almost 1 percent and Newcrest Mining is rising more than 3 percent, while Gold Road Resources is losing almost 2 percent. Resolute Mining is flat.

In other news, shares in Boral are surging more than 6 percent after the Building material company announced a massive $3 billion capital return.

In economic news, the manufacturing sector in Australia continued to expand in January, albeit at a slower pace, the latest survey from Markit Economics showed on Tuesday with a manufacturing PMI score of 55.1. That’s down from 57.7 in December, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. This marks the twentieth straight month in which the sector grew, though the rate of expansion fell to a five-month low.

The total value of retail sales in Australia was down a seasonally adjusted 4.4 percent on month in December, the Australian Bureau of Statistics said on Tuesday – coming in at A$31.926 billion. That missed expectations for a flat reading following the 7.3 percent jump in November. On a yearly basis, retail sales were up 4.8 percent.

The ABS also said the value of owner-occupied home loans in Australia was up a seasonally adjusted 5.3 percent on month in December, coming in at A$22.47 billion. That follows the 7.6 percent spike in November. On a yearly basis, owner-occupied loans rose 12.4 percent, investment lending surged 73.9 percent and overall lending jumped 26.5 percent.

In the currency market, the Aussie dollar is trading at $0.707 on Tuesday.

The Japanese stock market is notably higher on Tuesday, extending the gains in the previous two sessions, with the benchmark Nikkei index staying below the 27,200 level, following the broadly positive cues from Wall Street overnight, with technology firms leading the gains. Traders are also relived after Prime Minister Fumio Kishida said he is not yet considering declaring a state of emergency for Tokyo.

However, concerns over the continued spike in domestic Covid-19 cases is limiting the upside, with Japan topping 70,000 daily new cases for the sixth straight day and hitting record highs each day in the last two weeks. Tokyo and 33 of the 47 prefectures have been placed under a quasi-state of emergency last week.

The benchmark Nikkei 225 Index closed the morning session at 27,194.66, up 192.68 points or 0.71 percent, after touching a high of 27,410.79 earlier. Japanese shares closed sharply higher on Monday.

Market heavyweight SoftBank Group is gaining almost 1 percent, while Uniqlo operator Fast Retailing is losing more than 2 percent. Among automakers, Honda is losing more than 1 percent and Toyota is edging down 0.5 percent.

In the tech space, Advantest is gaining more than 1 percent and Tokyo Electron is adding almost 1 percent, while Screen Holdings is losing 1.5 percent. In the banking sector, Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial are gaining almost 1 percent each.

The major exporters are higher. Panasonic and Canon are adding almost 1 percent each, while Mitsubishi Electric is gaining 1.5 percent and Sony is up more than 1 percent.

Among the other major gainers, Pacific Metals is soaring more than 13 percent, TDK is surging almost 13 percent, NEC is skyrocketing more than 11 percent, Shionogi & Co. is rising almost 9 percent, Tokyo Electric Power is gaining almost 7 percent, Mitsui O.S.K. Lines is adding more than 5 percent and East Japan Railway is up almost 5 percent, while Nippon Yusen K.K., Taiyo Yuden, CyberAgent, Seven & I Holdings and Nexon are adding more than 4 percent each.

Conversely, NSK is plunging more than 10 percent, Toray Industries is losing 8.5 percent, NTN is declining 6.5 percent and Mitsubishi Motors is down more than 5 percent, while NGK Insulators, Sumitomo Dainippon Pharma and Shizuoka Bank are down almost 5 percent each.

In economic news, the manufacturing sector in Japan continued to expand in January, and at a faster pace, the latest survey from Jibun Bank showed on Tuesday with a manufacturing PMI score of 55.4. That’s up from 54.3 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

The unemployment rate in Japan came in at a seasonally adjusted 2.7 percent in December, the Ministry of Internal Affairs and Communications said on Tuesday. That was shy of expectations for 2.8 percent, which would have been unchanged from the November reading. The participation rate slipped to 61.9 percent, easing from 62.0 percent in November.

In the currency market, the U.S. dollar is trading in the lower 115 yen-range on Tuesday.

Elsewhere in Asia, most of the regional bourses are closed on Tuesday for the Lunar New Year, including South Korea, Malaysia, Singapore, Taiwan, China, Hong Kong and Indonesia. New Zealand is up 0.9 percent.

On Wall Street, stocks moved sharply higher over the course of the trading day on Monday, extending the rally seen in the previous session. Tech stocks helped lead the continued advance on Wall Street, resulting in a particularly strong gain by the tech-heavy Nasdaq.

The major averages all posted notable gains, although the Nasdaq still outperformed its counterparts. While the Nasdaq soared 469.31 points or 3.4 percent to 14,239.88, the Dow jumped 406.39 points or 1.2 percent to 35,131.86 and the S&P 500 surged 83.70 points or 1.9 percent to 4,515.55.

The major European markets also mostly moved to the upside on the day. While the U.K.’s FTSE 100 Index closed marginally lower, the French CAC 40 Index rose by 0.5 percent and the German DAX Index shot up by 1 percent.

Crude oil prices moved up sharply on Monday amid possible disruptions in supply due to mounting political tensions in Europe and the Middle East. West Texas Intermediate Crude futures for March ended higher by $1.33 or about 1.5% at $88.15 a barrel. WTI futures gained over 17% in the month, the best monthly returns since February 2021.

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