Asian Stocks Rise after Powell’s Speech

Highlights:

• USA
  The Dow Jones advanced by 0.69% or 242.68 to 35,455.80. Meanwhile, S&P 500 added 0.88% or 39.37 to 4,509.37. The Nasdaq composite index gained 1.23% or 183.69 to 15,129.50. 
• ASIA
  The Nikkei increased by 0.54% or 148.15 to 27,789.29. |
  The Kospi gained 0.33% or 10.29 points to 3,144.19.
  The Hang Seng extended by 0.52%, or 131.65 points, to 25,539.54.
• EUROPE
  In the morning trading session, Stoxx 600 traded flat.

Wall Street Ended Last Week with Record Gains

Wall Street returned to records last Friday because of the optimism generated by the approval of two vaccines in the US. At the same time, Jerome Powell, the president of the Federal Reserve, has announced the beginning of stimulus withdrawal. 

Last week has been confusing for investors. However, Powell’s speech satisfied the markets.

The Dow Jones advanced by 0.69% or 242.68 to 35,455.80. Meanwhile, the S&P 500 added 0.88% or 39.37 to 4,509.37. The Nasdaq composite index gained 1.23% or 183.69 to 15,129.50. 

For the week, the Dow Jones accumulated a gain of 0.95%. The S&P increased by 1.5%, and the Nasdaq Composite Index added a solid 2.8%. 

The Fed Starts Talking about Tapering

Powell stated in his long-awaited speech in Jackson Hole that the central bank would start tapering by the end of this year. 

Due to the strength of the economic recovery, the head of the US central bank said that it is no longer necessary to keep the extraordinary monetary stimulus put in place to balance the impact of the Covid-19 pandemic. However, investors are reassured now since there is still a long way to the rise in interest rates.

With regards to the coronavirus pandemic, the Fed has been maintaining interest rates near 0 and monthly bond purchases at 120,000 million dollars. in response to the economic impact of the coronavirus pandemic. 

As for the inflation figures, it stood at 5.4% in July, the highest level in ten years. Powell mentioned that it is a cause for concern, but several factors moderate it, particularly, ones that suggest these elevated data are likely to prove temporary.

 This week, the unemployment rate will be published for August in the US. Stocks will be waiting for several relevant macroeconomic indicators this week. On Wednesday, investors’ focus will be on the final number for this month’s manufacturing PMI.

Nikkei was Supported by an Advance in Asian Stocks

The Nikkei index increased on the Tokyo Stock Exchange by 0.54% or 148.15 to 27,789.29. 

Buy orders were placed in a wide range following the Wall Street rise. Following the Powell Speech, the Japanese market rose by 1% in the first 30 minutes of the session.

In addition, the increase in value in major Asian markets such as Shanghai and Hong Kong also contributed to the support for stock prices.

Concern about the number of Covid-19 cases in Japan in recent weeks and its potential impact on the recovery of the national economy also played a role. Meanwhile, there are rumors about a possible extension of the state of emergency in the country.

All sectors registered gains today, led by iron and steel, maritime transport, and non-ferrous metals.

The Nippon Steel company was the biggest winner among the firms listed on the Nikkei. It surged by 5.26%. The non-ferrous metals manufacturer Dowa Holdings followed it by a 5.25% advance. Meanwhile, the transport company Mitsui OSK gained 5.1% and was second by volume of operations.

Nippon Yusen accumulated the highest number of transactions of the day and climbed by 2.75%. Toyota advanced by 0.78% and Sony added a slight 0.04%. At the same time, Nintendo, the video game developer, and distributor gained 1.39%.

In contrast, Softbank group shares experienced a slump today, shrinking by 0.46%.

The Kospi Advanced on the Second Day in a Row

The Kospi gained 0.33% or 10.29 points to 3,144.19 following Wall Street. Meanwhile, the Kosdaq technological index advanced by 0.81% or 8.33 points, to 1,031.84. 

The Kospi index continued its upward trend after starting at 3160.8. 

By industry, the ups and downs were mixed. Construction, steel and metal, transportation and warehouse, food and beverage, manufacturing, distribution, pharmaceuticals, machinery, the telecommunication industry, and transportation equipment posted advances. Meanwhile, Medical precision, banking, and finance sectors dropped.

Naver, the largest South Korean internet search engine, expanded by 1.9%. Meanwhile, Kakao, the popular messaging application owner, climbed by 1%. 

The technological Samsung Electronics gained 0.4% today, and the world’s second-largest memory chip manufacturer, SK Hynix, closed unchanged.

Samsung Biologics also closed flat. At the same time, its competitor Celltrion slipped by 1.19%.

As for Hyundai Motor, the largest South Korean car manufacturer improved its value by 0.72%.

Hang Seng Closed in the Green After 3 Days of Losses

The Hong Kong Stocks had a good performance today, encouraged by tech and oil companies. The Hang Seng extended by 0.52%, or 131.65 points, to 25,539.54.

The China Enterprises Index climbed by 0.42% or 38.01 points, to 8995.82 points.

Among the sub-indices, only Commerce and Industry grew, increasing by 1.55%. However, it was sufficient to counterbalance the falls in Real Estate, Finance, and Services sectors.

QAs for the companies with the significant rises, solar panel manufacturer Xinyi Solar led with a surge of 9.39%. Also, Alibaba’s health services subsidiary Ali Health hiked by 5.67%.

Tencent, a heavyweight stock in the Hang Seng, slipped by 0.1%.

Alibaba added 1.5%.

Real estate developer Longfor Group shed 3% and was the biggest loser of the session. China Resources Land and Hang Lung Properties slumped by 1.2% and 1.4% each and were among the weaker five.

European Stocks Hold Firm Near Record Highs

European stocks held firm on Monday near record highs reached earlier this month. Hopes that continued central bank support would sustain economic recovery offset distress over soaring Delta Covid-19 variant cases.

In the morning trading session, Stoxx 600 traded flat, but it was on course to end this month with a more than 2% increase. This way, it will mark its seventh straight month of gains, the longest winning streak over eight years.

Uk markets were closed due to a holiday. At the same time, Germany’s DAX was trading with an increase of around 0.1% in morning trading.

Automakers, technology, and retail companies were among the top gainers today.

Still, worries about tighter regulation on Chinese tech firms disturb the market. Resurgence in Covid-19 cases prompts fresh lockdowns in parts of the world.

A study proved that people who get the Delta variant are twice as likely to be hospitalized as those infected by the Alpha variant.

However, the European Central Bank seems optimistic. It expects the more contagious variant to have a limited impact on the eurozone economy due to an advanced vaccination campaign.