Asian stock markets are mostly advancing on Tuesday, influenced by the positive trends from Wall Street overnight. Investors are responding to remarks from US Federal Reserve Chair Jerome Powell, who indicated that the central bank would continue to reduce interest rates but emphasized that the rate reduction path is not predetermined. Asian markets had a mixed close on Monday.
Powell's comments have partially tempered optimism about the Federal Reserve lowering interest rates aggressively in the coming months.
The Federal Reserve's next monetary policy meeting is set for November 6-7. According to CME Group's FedWatch Tool, there is currently a 65.3% probability that the central bank will reduce rates by 25 basis points and a 34.7% likelihood of a 50 basis point cut.
Contrary to the general upward trend, the Australian stock market is experiencing notable losses on Tuesday, despite positive cues from Wall Street. The benchmark S&P/ASX 200 is falling towards the 8,200 level, with declines in mining and financial stocks partially offset by gains in technology and energy sectors. The S&P/ASX 200 Index is down 58.00 points or 0.70% to 8,211.80, after hitting a low of 8,209.90 earlier, while the broader All Ordinaries Index is down 53.30 points or 0.62% to 8,485.10. On Monday, Australian stocks had closed significantly higher.
Major mining stocks are under pressure, with BHP Group losing almost 2%, and Rio Tinto, Mineral Resources, and Fortescue Metals each falling by 2.5%.
Oil stocks are mostly up. Origin Energy is inching higher by 0.3%, while Woodside Energy and Santos are each gaining nearly 1%. Beach Energy remains flat.
In the tech sector, Appen is soaring by more than 9% and WiseTech Global is up nearly 1%, while Afterpay owner Block and Xero are edging up by 0.3% each. Zip is slightly down by 0.4%. Gold miners are facing losses, with Gold Road Resources down 2.5%, Evolution Mining losing over 1%, Newmont edging down 0.3%, Resolute Mining slipping almost 2%, and Northern Star Resources declining nearly 1%.
Among the major banks, Commonwealth Bank is down nearly 1% and Westpac has fallen by over 1%, while ANZ Banking and National Australia Bank are slightly down by 0.2% to 0.5% each.
In other news, Sigma Healthcare shares are soaring more than 13% after announcing data-sharing rules to appease regulatory concerns regarding its proposed $700 million merger with Chemist Warehouse.
Qantas shares are down almost 4% after Qatar Airways announced plans to acquire a 25% stake in Virgin Australia.
REA Group shares are down by more than 4% after the company abandoned its bid for Rightmove, following the UK-listed real estate site's rejection of REA Group's fourth bid in a few weeks.
In economic developments, Australia's manufacturing sector continued to contract in September at an accelerated pace, as reported by Judo Bank on Tuesday. The manufacturing PMI score declined to 46.7 from 48.5 in August, moving further below the 50-mark that separates expansion from contraction.
The Australian Bureau of Statistics (ABS) reported a 6.1% seasonally adjusted decline in building permits issued in Australia in August, totaling 13,991 consents, missing the forecasted 4.3% decline and following an upwardly revised 11.0% spike in July (originally 10.4%). Annually, permits increased by 3.6%. The total value of building approvals fell 0.2% to A$13.25 billion after a 6.9% rise in July.
The ABS also noted that retail sales in Australia increased by a seasonally adjusted 0.7% in August, reaching A$36.474 billion, surpassing the forecasted 0.4% rise and following an upwardly revised 0.1% increase in July (originally flat). On an annual basis, retail sales rose by 3.1%.
In the currency market, the Australian dollar is trading at $0.693 on Tuesday.
Rebounding from significant losses in the prior session, the Japanese stock market is sharply higher on Tuesday, with the Nikkei 225 rising well above the 38,500 level. This rise follows positive cues from Wall Street, with gains across all sectors, led by index heavyweights and technology stocks.
Markets are also reacting to incoming Prime Minister Shigeru Ishiba's support for the Bank of Japan's policy to raise interest rates from their near-zero levels, as well as other potential policies, including possible corporate tax increases.The benchmark Nikkei 225 Index ended the morning session at 38,476.33, gaining 556.78 points or 1.47%, after reaching an earlier high of 38,621.94. Notably, Japanese shares experienced a significant decline on Monday.
Market heavyweight SoftBank Group saw an increase of almost 3%, while Fast Retailing, the operator of Uniqlo, added nearly 2%. In the automotive sector, Honda rose more than 2% and Toyota followed with an increase of almost 2%.
In the tech sector, Advantest gained almost 2%, Screen Holdings advanced nearly 3%, and Tokyo Electron saw an increase of over 3%.
Banking sector giants Mitsubishi UFJ Financial, Sumitomo Mitsui Financial, and Mizuho Financial each gained 2.5%.
Among major exporters, Canon increased by almost 2% and Mitsubishi Electric added over 1%, while Panasonic and Sony noted gains between 0.2% and 0.5%.
Other significant gainers included Kawasaki Heavy Industries, which soared over 8%, and Mitsubishi Heavy Industries, which surged almost 7%. IHI and Japan Steel Works each advanced more than 7%, TDK and Ebara rose by more than 5% each, and Fujikura and Nitto Denko added over 4% each. Additionally, Nomura Holdings, Disco, Japan Exchange Group, Hitachi, and Isetan Mitsukoshi each experienced a rise of nearly 4%, with Socionext up more than 3%.
Conversely, there were no notable losers in the market.
On the economic front, Japan's unemployment rate fell to a seasonally adjusted 2.5% in August, as reported by the Ministry of Internal Affairs and Communications, surpassing expectations of 2.6% and down from 2.7% in July. The jobs-to-applicant ratio was 1.23, slightly below forecasts of 1.24, and the participation rate ticked up to 63.6% from 63.5% in the previous month.
According to the latest survey from Jibun Bank, Japan's manufacturing sector continued to contract in September at a faster pace, with a manufacturing PMI score of 49.7, down from 49.8 in August, further below the 50 threshold that separates expansion from contraction.
The Bank of Japan's quarterly Tankan Survey of business sentiment revealed that large manufacturing in Japan remained steady in Q3 2024, with a diffusion index score of +13, beating forecasts of +12 and unchanged from the previous quarter. The outlook stood at +14, meeting expectations and maintaining steadiness from the previous quarter. For the large non-manufacturers index, it came in at +34, beating forecasts of +32 and up from +33. However, 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, looking forward to +16. The small manufacturing index was neutral at 0, whereas the small non-manufacturing index stood at +14.
In the currency market, the U.S. dollar is trading in the upper 143 yen-range on Tuesday.
Elsewhere in Asia, markets in New Zealand, Malaysia, Taiwan, and Indonesia closed higher by 0.2% to 0.5% each, while Singapore fell by 0.2%. Markets in China were closed for Mid-Autumn Festival and National Day, while Hong Kong was closed for National Day and South Korea for Armed Forces Day.
On Wall Street, U.S. stocks displayed limited direction throughout Monday’s session but ended mostly higher. The major indices all concluded the day in positive territory, improving upon a mixed performance from last Friday.
The Dow inched up 17.15 points, less than a tenth of a percent, to close at a new record of 42,330.15. The Nasdaq climbed 69.58 points or 0.4% to 18,189.17, while the S&P 500 rose 24.31 points or 0.4% to reach a new record closing high of 5,762.48.
In contrast, European markets saw declines across the board. The French CAC 40 Index fell by 2.0%, the U.K.'s FTSE 100 Index declined 1.0%, and the German DAX Index slid 0.8%.
Crude oil prices were flat on Monday due to uncertainty surrounding China's oil demand outlook. West Texas Intermediate Crude oil futures for November ended marginally down by $0.01 at $68.17 per barrel.