Asian markets rallied again yesterday with investors taking heart from another record close on Wall Street and talk of central bank stimulus, while China released better than expected export figures for June.
Japan’s Nikkei was once again the stand-out market, soaring on the back of a weaker yen and wiping out almost all the losses suffered after the shock of Britain’s June 23 vote to leave the European Union.
An optimistic tone has filtered through trading floors all week, after US data on Friday showed the world’s number one economy created far more jobs than expected last month.
A landslide win for Japan’s ruling party at the weekend and the sooner-than-expected choice of a replacement for Britain’s David Cameron as prime minister has also lifted confidence.
Australia’s ruling party was also confirmed at the weekend as winners of a general election held eight days earlier.
The vote in Japan has fanned expectations the country’s leaders will push through a giant stimulus programme to reignite stuttering growth, with reports saying it could be as much as ¥10tn.
The prospect of more cash flooding the Japanese market, as well as the US jobs figures, has sent the yen tumbling around 4% since Thursday — boosting exporters on Tokyo’s exchanges.
In afternoon business, the dollar eased to ¥104.30 from ¥104.66 late in New York but remains well up from the ¥103.12 earlier Tuesday in Asia.
The dip in the dollar came after Japan’s top government spokesman rejected a report saying the government was considering so-called helicopter money to stimulate growth.
The term tends to refer to stimulus that would be pumped straight into the economy — such as into people’s bank accounts — rather than through the banking system by means of asset purchases and other easing measures.
The pound climbed again, to $1.3291 from $1.3249 although traders are awaiting Thursday’s Bank of England policy meeting that is expected to see it cut interest rates for the first time in more than seven years to cope with the fallout of Britain leaving the EU.
The Nikkei index ended up 0.8% to finish just short of its June 23 close, before it dived almost 8% in reaction to the Brexit vote.
Hong Kong ended up 0.5% and Shanghai was 0.4% higher.
Soon after the markets closed in China, the government said exports rose 1.3% in yuan terms in June, better than the 0.3% forecast in a survey by Bloomberg News and up from May.
However, imports fell more than expected, indicating weak demand at home.
Customs attributed the fall in import values to weakening commodity prices.
Sydney and Seoul each added 0.7%, while Singapore, Manila and Bangkok also posted healthy gains.
“Japan’s stimulus package and a massive wave of positive risk sentiment have spurred Wall Street to record highs,” said Stephen Innes, senior trader at OANDA Asia Pacific.
“Along with the stimuli, diminishing political uncertainty in the UK, Japan and Australia has added supportive foundation to this current risk rally.”
The advances came after the Dow and S&P 500 hit fresh records in New York while the tech-rich Nasdaq closed above 5,000 for the first time this year.
On oil markets, both main contracts retreated after soaring almost 5% on Tuesday in reaction to an Opec forecast that predicted an oversupply on world markets would ease this year.
West Texas Intermediate was down 1.5% at $46.12 and Brent slipped 1.6% to $47.68.
But in early European trade, investors began taking a breather, with London and Frankfurt each down 0.2% and Paris 0.1% off.
In Tokyo, the Nikkei 225 up 0.8% at 16,231.43 points; Hong Kong — Hang Seng up 0.5% at 21,322.37 points and
Shanghai — Composite up 0.4% at 3,060.69 points at the close yesterday.
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