Most Asian stock markets rose on Thursday, tracking gains on Wall Street amid optimism that the U.S. debt ceiling will be raised. For the first time since September 2021, the Nikkei 225 Index surpassed the significant psychological level of 30,000 by jumping 0.8 percent to reach 30,093.59.[0] Boosted by a weaker yen, exporters saw the broader Topix rise by 0.3 percent to a new 33-year high of 2,133.61.[0] However, gains in Asian equities were mixed on Tuesday, as investors digested weaker-than-expected Chinese economic data.[1] April’s industrial production and retail sales data from the second-largest economy in the world failed to meet expectations, indicating more indications of a recovery that is not consistent.[1]
The Shanghai Composite Index in China experienced a 0.2 percent decline, falling to 3,284.23. This decline is attributed to indications that the country’s economic recovery following COVID-19 is gradually slowing down. Investors are now anticipating data on industrial production, retail sales, and fixed asset investment from China, which is due on Tuesday, as the blue-chip Shanghai Shenzhen CSI 300 index experienced a 0.4% decline. Although some improvement is anticipated in April’s data compared to the previous month, it follows a series of Chinese economic reports that fell short of projections.[2] The offshore yuan fell 0.4% to 7.0380 per dollar, while the yuan fell 0.3% against the dollar in both onshore and offshore markets.[3] The People’s Bank of China exceeded analysts’ expectations by setting a higher daily benchmark, indicating a willingness to control the rate of descent.[4]
Amid these concerns, the offshore yuan breached the psychologically important 7 level for the first time this year.[3] A string of weak economic readings pointed to a slowing recovery in China. Despite data indicating higher-than-expected growth in Japan’s economy during Q1 2023, the Japanese yen experienced a 0.1% drop with little backing.[3] However, despite sluggish growth in Japan’s major export markets, the economic forecast remained gloomy.[3]
Despite these challenges, a gauge of Asian stocks climbed as Japan’s Topix index set a fresh 33-year high, with rising exports and a weakening yen buoying sentiment.[4] Following Wednesday’s surge of over 1% in the S&P 500 and Nasdaq 100, US equity futures remained stable.[4] On the back of optimism surrounding a prospective agreement between U.S. President Joe Biden and congressional leaders to increase the U.S. debt ceiling and prevent a default, markets in the Asia-Pacific region experienced a surge. Following the announcement by the Biden Administration that an agreement to raise the U.S. debt ceiling could be achieved this week, Asian markets experienced a surge, in line with the gains seen on Wall Street.
Overall, the global markets remain volatile, as investors weigh the potential impact of the ongoing pandemic and geopolitical tensions on the global economy. The outlook for European markets suggests a stagnant start due to the unsettling effect of political and economic instability on market sentiment in the region.[1] However, the markets remain optimistic that a resolution to the U.S. debt ceiling issue will help to stabilize the global economy and support continued growth in the markets.
0. “Asian Shares Mixed On Chinese Growth Concerns” RTTNews, 17 May. 2023, https://www.rttnews.com/3364685/asian-shares-mixed-on-chinese-growth-concerns.aspx
1. “Sentiment Fragile Amid US Debt Ceiling Standoff” FX Empire, 16 May. 2023, https://www.fxempire.com/forecasts/article/sentiment-fragile-amid-us-debt-ceiling-standoff-fxtm-academy-1347064
2. “Asian stocks dip ahead of Chinese data, Fed cues By Investing.com” Investing.com, 15 May. 2023, https://www.investing.com/news/stock-market-news/asian-stocks-dip-ahead-of-chinese-data-fed-cues-3081950
3. “Asia FX weakens as hawkish Fed comments weigh, Chinese yuan in focus By Investing.com” Investing.com, 17 May. 2023, https://www.investing.com/news/forex-news/asia-fx-weakens-as-hawkish-fed-comments-weigh-chinese-yuan-in-focus-3084259
4. “Asian Stocks Follow US Gains on Debt-Deal Optimism: Markets Wrap” Yahoo Finance, 18 May. 2023, https://finance.yahoo.com/news/asia-stocks-rise-us-gains-225106087.html