By Kenan Machado
Asian equity markets mostly rose Thursday, with Japan’s Nikkei hitting a new 2016 high, on a fresh wave of optimism after a record close on Wall Street, and Donald Trump’s announcement of the next U.S. ambassador to China.
Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -3.25% ended up 1.2%, the Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.67% climbed 1.5%, Korea’s Kospi index /zigman2/quotes/210598069/delayed KR:180721 -3.30% surged 2% while Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.42% ended up 0.3%.
Asia’s strong performance followed overnight gains on Wall Street, with both the Dow Jones Industrial Average and the S&P 500 hitting record highs.
“The nervousness is tending to dissipate,” said Jim McCafferty, head of research for Asia excluding Japan at Nomura Securities, referring to earlier uncertainty over Mr. Trump’s administrative choices. “Trump’s appointments have been relatively sensible and seasoned people.”
Trump on Wednesday picked Terry Branstad to become the next U.S. ambassador to China. The 70-year-old Iowa governor has a decadeslong relationship with Chinese President Xi Jinping, who first visited Iowa as part of a sister-state exchange program in 1985.
Beijing welcomed the selection, calling Branstad “an old friend.” His appointment could help assuage tensions with China, after Trump received a congratulatory call from Taiwan President Tsai Ing-wen last week. China considers Taiwan a renegade province.
Overall, risk appetite among investors globally was on the rise, said Arthur Kwong, head of equities for Asia at BNP Paribas Investment Partners, thanks to a recent slew of positive news and data that helped support equity markets.
“Unemployment in the U.S. is coming down to a healthy level, salaries in Japan are going up with currencies in Asia stabilizing, and the Fed rate hike has been properly digested,” he said, referring to the strong investor expectation of an increase in short-term interest rates from the U.S. Federal Reserve next week.
Japanese stocks also benefited despite Japan growing at a slower pace than initially estimated in the July-September quarter, according to data released Thursday. Upward revisions of economic data in earlier quarters suggested that on the whole, the Japanese economy was doing reasonably well for the year.
Among individual stocks, Tokyo Electric Power /zigman2/quotes/202771076/delayed JP:9501 -3.07% surged 17.5% on reports that Japan will increase an interest-free loan to the operator of the troubled Fukushima nuclear plant. Also, electronics parts maker Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 -5.05% rose 9.3%, the best performer among Japanese stocks with market capitalization of $10 billion or more.
Commodity stocks in Asia were broadly higher, after iron-ore prices hit an over two-year high, as China trade data Thursday showed imports of the commodity were up 9.2% from January to November, compared with a year earlier.
Among resource stocks, Rio Tinto /zigman2/quotes/200083756/delayed AU:RIO -3.47% ended up 3.1%, while Fortescue Metals /zigman2/quotes/202351558/delayed AU:FMG -6.41% rose 1.7% and BHP Billiton /zigman2/quotes/208108397/composite BHP -3.58% added 1.2%. Japan’s Mitsui & Co. /zigman2/quotes/205346820/delayed JP:8031 -3.54% ended up 1.3%.
Trump taps Branstad as China ambassador
President-elect Donald Trump has picked Iowa Gov. Terry Branstad, who has long ties with Chinese President Xi Jinping, as the U.S. ambassador to China. Photo: Reuters
Meanwhile, the Chinese market was weighed down by authorities’ increased scrutiny of aggressive stock purchases by some insurance companies. Regulators are worried the buying has been excessively speculative, and that some of the stake-building has been predatory.
The Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -3.71% declined 0.2%, while the Shenzhen Composite Index lost 0.6%.
Looking ahead, investors will be closely watching the European Central Bank. Most investors and analysts expect its meeting later Thursday to produce at least a six-month extension to the bank’s monthly purchase of €80 billion ($86 billion) of assets. The ECB will also likely ease its bond-purchase criteria to get around the “running out of bunds” problem, analysts said.
“An extension would be good for risk assets globally,” said Bill Bowler, an equity sales trader for Asian equities at Forsyth Barr Asia.
—Rhiannon Hoyle, Kosaku Narioka, Jonathan Cheng, Carol Chan, Akane Otani, Yifan Xie, Sam Goldfarb and Mitsuru Obe contributed to this article.