Global Stock Market Rallied on Fed Williams’ Remarks

Highlights

• New York Fed Chairman John Williams statements encouraged investors globally;
• Wall Street closed the session in the green with all the sectors ending higher;
• Tokyo Stock exchange surged by 3.12% delivering gains in all sectors;
• Kospi erased losses made the day before adding 0.71%;
• Hang Seng was dragged down by the technology sector, settling with losses of 0.63%;
• STOXX 600 struggled to hold onto gains.

On Monday, Wall Street closed on positive grounds. Its main indicator, the Dow Jones, increased by 1.76% or 586.89 points, to 33,876.97. Stocks were influenced by the economic outlook of the Federal Reserve. American Express, Boeing, Chevron, and Travelers were the prominent gainers.

Meanwhile, the selective S&P advanced by 1.40% or 58.33 points, to 4,334.78. 

The Nasdaq composite index, listing the leading technology companies, added 0.79% or 111.10 points, to 14,141.48.

All sectors on Wall Street ended in the green. Among them, a surge of energy companies stood out. Devon Energy expanded by 7.03%. Meanwhile, Occidental Petroleum advanced by 5.39%.

The financial sector hiked by 2.35%, industrial and basic materials added 2.18% and 2.07%, respectively.

Volatility Returned to its Course 

Last week, the Federal Reserve caught the markets off guard. The central bank stated the possibility of rising rates twice in 2023 and expectations of inflation to increase by 3.4% in 2021. 

The Fed’s comments were followed by St. Louis Federal Reserve Bank President James Bullard’s projections about the initial rate increase, which might come as early as 2022.

Since the central bank meeting on Wednesday, equities of banks, energy firms, and other companies sensitive to economic fluctuation have dropped dramatically. 

The last session on the New York Stock Exchange became characterized by volatility. Today it almost returned to its course. 

Today, investors will be watching an appearance by Fed Chairman Jerome Powell before Congress closely. 

According to Paul Hickey from Bespoke Investment Group, investors favoring bullish pace regrouped on Monday after Friday’s decrease.

Bond yields had a volatile day on Monday. Investors tried to determine the rate of inflation and other economic factors. At one point, the 10-year US Treasury yields plummeted to 1.354%. It reached its lowest level since February 24. However, it bounced back and settled at 1.478%.

Nikkei Tracked Rebound on Wall Street

Nikkei, the main index of the Tokyo Stock Exchange, closed today with a rise of 3.12%. JP225 had the most robust session in more than a year. It followed the Wall Street rebound.

Nikkei advanced by 873.2 points to 28,884.13 integers.

The broader Topix index of all First Section equities on the Tokyo Stock Exchange ended with a hike of 60.08 points, or 3.16 percent, higher at 1,959.53.

The Nikkei gained momentum in the first minutes of trading, reaching over 2% and accelerating towards the end of the session, after registering the worst drop since February the day before.

The dissipation of concerns about an early rate hike in the United States spurred investors in Tokyo. It delivered gains in all sectors, led by shipping, rubber products, port, and warehousing services.

In the First Section, advancing stocks outnumbered decliners 2,107 to 69. Meanwhile, 17 ended unchanged.

According to brokers, marine transportation shares surged after Mitsui O.S.K. Lines Ltd. forecast more than a double increase in the net profit for March 2022 compared to 2020.

Mitsui O.S.K. Lines climbed by 490 yen, or 10.2%, to 5,300 yen. At the same time, Nippon Yusen rose by 530 yen, or 10.3%, to 5,670 yen.

Weaker yen supported a hike of export-related shares. Fujitsu added 5%, or 945 yen, to 20,005 yen. Meanwhile, Sony rose by 3.1%, or 330 yen, to 10,870 yen.

It’s worth noting the 1.63% rise of Lasertec, a manufacturer of components for semiconductors. Fast Retailing, owner of the chain of clothing stores Uniqlo, advanced by 3.13%. Sony technology corporation also gained 3.13%.

Kospi Recovers as Fears of Hike Rate Eases

 Kospi rebounded on Tuesday and increased by 0.71% or 23.09 points to stand at 3,263.88 units. 

The Kosdaq technology stock index added 0.06% or 0.57 points to 1,011.56 integers. 

The South Korean stock market erased almost all the losses it made the day before due to the Fed’s hard-line stance to bring forward the rise in interest rates and the withdrawal of monetary stimuli. 

The dovish position of the US central bank is betting on starting the process in 2023. Recent remarks by New York Fed Chairman John Williams, stating the recent rise in inflation is likely temporary, encouraged investors in Seoul and South Korea. In fact, it drove today’s stock market rally.

Samsung Electronics, a reference value of the local market, fell by 0.13% to 80,000 won. Meanwhile, the second-largest South Korean chipmaker, SK Hynix, closed flat at 122,000 won.

Naver, the country’s primary internet provider, slipped by 1.51% to 391,000 won. Kakao, its rival, gained 2.58% to 159,000 won. 

Pharmaceutical company Samsung Biologics yielded 0.94%.

Hyundai Motor, South Korea’s largest carmaker, surged by 3.43%, and its sister company Kia added 2.75%, 89,800 won.

The shares of chemical firm LG Chem rose by 2.43%, and Steelmaker Posco advanced by 1.64% to 341,000 won. 

The won raised 2.80 against the US dollar, trading at 1,131.90 won at the session’s close.

Hang Seng Resumes its Downward Trend

Hang Seng, the Hong Kong Stock Exchange benchmark index, settled today with losses of 0.63%. The Hong Kong stocks maintained the downward trend of the last session. 

The selection lost 179.24 points to 28,309.86. Meanwhile, the Hang Seng China Enterprises declined by 0.74%. 

Sub indices closed in mixed territory. The services sector advanced by 1.13%, and Real Estate increased by 0.35%. Finance settled almost flat with a decrease of 0.1%, and the Industry sector plunged by 1.25%. Digital giants made notable losses. Meituan plummeted by 2.98%, Tencent declined by 2.88%, and Alibaba yielded 1.17%.

As for other stocks that suffered losses, the pharmaceutical services company Wuxi Biologics slumped by 1.67%, and the automaker BYD depreciated by 4.04%. 

In the financial sector, 5 of 11 companies did not register changes in their price. HSBC posted the biggest gain among the rest of them. The company’s shares advanced by 0.44%. Meanwhile, HKEX decreased the most by 1.78%.

The real estate department saw some more movement. CG Services added 2.58%, and Link REIT lost 0.64%.

Chinese state oil companies’ shares were boosted after the rise in international crude prices. Petrochina expanded by 5.85%. It was followed by a 3.54% rise in Sinopec and Cnooc’s gain of 2.77%.

The business volume of the session was 141.380 million Hong Kong dollars (18.206 million US dollars).