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Asian Market Update – Thursday: Asian stocks point higher on prospect of US debt ceiling deal

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Asian Market Update – Thursday: Asian stocks point higher on prospect of US debt ceiling deal

Introduction

This article was posted on Thursday, 06:46, UTC.

The Big Question: How would a US government shutdown affect the markets?

Major equity markets in the Asia Pacific edged up on Thursday, trimming down earlier losses from sell-offs amid rising tensions on the Korean Peninsula, as investors appeared to be relieved about the reduced likelihood of a shutdown in the US government.

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In Japan, the Nikkei 225 reversed a downtrend started earlier this week. At midday, the benchmark gained 0.37 percent to 19,430.19.

In South Korea, the KOSPI index ticked up 1.11 percent to 2,345.59 around midday.

Down under, the ASX 200 added 0.30 percent to 5,707.00.

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In Greater China, shares were mixed on Thursday, with the Hong Kong Hang Seng index up 0.24 percent to 27,680.43 and the Shanghai Composite down 0.23 percent to 3,377.71 at midday. Analysts believe the Shanghai bourse still holds great prospects for extending a winning streak, despite some short-term downtrend along the way.

The rise in Asian stocks on Thursday appears to be investors responding positively to a deal between US President Donald Trump and US Congressional Republicans for temporarily raise the debt limit for the US government to prevent it from being shut down.

But analysts in China cautioned that potentially escalated tensions on the Korean Peninsula could spook investors and spark a deep sell-off, not only in Asia Pacific but also other global markets.

It is highly expected that North Korea will launch another intercontinental ballistic missile or ICBM in the coming days and the US, South Korea and Japan could hold joint military drills in show of force. That would raise tensions once again.

Another event to watch is a new hurricane reportedly on its way to hit some states in the US, including Florida. Officials in the state are already warning of severe damages. Coming after a once-in-a-hundred year hurricane just hit the energy hub of Houston, the new hurricane, dubbed Irma, could add to losses in the US economy.

All eyes are on the meeting of European Central Bank on Thursday. The meeting is expected to give some sense of where the euro is headed and could change the direction of the currency and impact financial markets.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,430.19 0.37%
China-Shanghai Composite Index 3,377.71 -0.23%
Australia-ASX 200 5,707.00 0.30%
Hong Kong-Hang Seng 27,680.43 0.24%
South Korea- KOSPI 2,345.59 1.11%

Cryptocurrencies

Digital currencies seem to have a hard time regaining grounds following sharp falls earlier in the week. Overnight, both bitcoin and ethereum prices were pointing lower, after slight gains in the previous day.

Bitcoin prices declined 2.20 percent at midday in the Asian trading session, changing hands at around $4,500. The fall came after the virtual currency recovered from a low of around $4,206 the previous day.

A similar trend is seen in the ethereum price. Overnight, the ethereum price dropped 3.56 percent to $325.27. Ethereum bounced from about $269 to nearly $340 in the previous day.

Currencies

The Japanese yen gained 0.09 percent against the US dollar overnight to 109.08 per dollar.

The Chinese yuan gained 0.02 percent to 6.5207 per dollar. Chinese analysts say the yuan now overcomes one-way depreciating expectation and is likely to remain stable against the dollar in the near term, given stronger fundamentals.

The Australian dollar lost a slight 0.17 percent to 1.2515 per dollar overnight.

Commodities

WTI Oil lost 0.18 percent to $49.05 per barrel.

Brent Crude was down 0.22 percent to $54.03 per barrel.

Gold gained 0.08 percent to $1,334.63 an ounce.

Business News across Asia

In China, the question is if Facebook is about to return. Media reports said on Thursday that the US tech giant is secretly scouting out office space in Shanghai in recent months. Sources said Facebook is looking to use the office space to develop hardware and expand its business in China.

Take away: Facebook is currently banned in China, but has shown great interest in the Chinese market. After all, no major Internet company would miss the giant market there. But how Facebook will surpass the strict controls imposed by Chinese officials remains to be seen.

In India, nationalism seems to be on the rise. Indian society has always been filled with tough talks against its neighbors Pakistan and China. But that seems to have escalated. An Indian army chief is making rounds in Indian media after urged to prepare for simultaneous war with China and Pakistan.

Take Away: India just made peace with China over a months-long military stand-off at the border between the two countries. New talks of war and rising nationalism could plague one of the world’s most dynamic economies. Economic growth already slumped to a three-year low of 5.7 percent in the latest quarter ended June.

Featured image from Flickr.

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Fredrik Vold

Fredrik Vold

Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He mainly follows the stock and forex markets, and is always looking for the next great alternative investment opportunity.

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