By Kenan Machado
Asian equities bounced back on Thursday, tracking overnight U.S. gains following a deal to extend the federal government’s borrowing limit for three months.
Recent tensions in the Korean Peninsula were a trigger for investors to take profit from this year’s robust gains, with stock indexes in markets like Hong Kong, South Korea, India and Singapore notching double-digit increases.
Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -3.94% led gains, rising 1.2%, as attention — for now — shifted away from North Korea. The rebound came after five consecutive trading sessions in the red, to mark its longest losing streak since April. Elsewhere, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -2.19% was up 0.5% as trading began, while Singapore’s Straits Times Index /zigman2/quotes/210597985/delayed SG:STI -1.65% added 0.4%.
On Wednesday, U.S. stocks rose after President Donald Trump backed a deal with congressional Democrats to attach hurricane relief money to a three-month extension of both government funding and the debt limit.
The surprise deal suggests Trump could show more flexibility on other spending initiatives with the Democrats, analysts say.
“Investors responded to the reduction in short-term uncertainty,” said Michael McCarthy, chief market strategist at CMC Markets. However, he said the deal is a short-term fix, and will add pressure on the government as the new deadline of Dec. 15 looms.
In Japan, the Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -4.50% was up 0.4%, as a recovery in the U.S. dollar against the yen helped boost export stocks. The dollar was buying 109.16 yen in morning trade, compared with 108.72 yen at the end of stock market trading on Wednesday.
Automotive stocks were among the best performers in Tokyo trading, with Mitsubishi Motors /zigman2/quotes/202404490/delayed JP:7211 -2.61% rising 2.4%, while Toyota /zigman2/quotes/203803129/delayed JP:7203 -2.61% added 1.3% and Honda Motor /zigman2/quotes/200490352/delayed JP:7267 -5.49% rising 1.2%.
Stocks in Korea were driven by the 1.9% rise in index heavyweight Samsung Electronics /zigman2/quotes/209800866/delayed KR:005930 -4.08% , amid a favorable outlook on demand for its organic light-emitting diode, or OLED, screens. There was market chatter that the electronics giant is the sole supplier of OLEDs to the high-end version of Apple’s new iPhone, to be unveiled next week.
Meanwhile, Australia’s S&P ASX/200 /zigman2/quotes/210598100/delayed AU:XJO -2.50% rose 0.3% with beaten-down banking stocks staging a recovery. Commonwealth Bank /zigman2/quotes/200638713/delayed AU:CBA -5.40% rose 0.7%, while Westpac /zigman2/quotes/203084975/delayed AU:WBC -4.43% gained 0.6% and Macquarie /zigman2/quotes/206727308/delayed AU:MQG -3.18% added 0.2%.
Bucking the region’s gains, however, are stocks in mainland China, which continue to move sideways as investors await new policy guidance from the government ahead of a major leadership summit next month. The Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.57% was last trading flat, after ending Wednesday’s session up a mere one point.