Asian stocks rise as China rebound, Wall St gains boost sentiment

Investing.com-- Most Asian stocks rose on Wednesday with Chinese markets extending a rebound on hopes of more government support, while a strong overnight close on Wall Street also provided a positive lead-in to regional markets. 

U.S. stock indexes came back within sight of record highs despite persistent concerns over higher-for-longer interest rates, following a string of robust economic readings and hawkish warnings from the Federal Reserve. 

These concerns had also severely dented Asian markets over the past two sessions, giving Wednesday’s gains an air of bargain buying. Chinese stocks were the biggest benefactors of this trend, as they rebounded from multi-year lows. 

Chinese stocks extend rebound on hopes of more govt support 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.5% and 0.8%, respectively, extending gains after rallying over 3% each on Tuesday. Rising mainland stocks saw Hong Kong’s Hang Seng index add 0.5%. 

Strength in Chinese stocks was spurred chiefly by Central Huijin- a sovereign fund- vowing to buy more local exchange-traded funds to support the local stock market. 

Bloomberg News reported that Chinese regulators were also meeting with President Xi Jinping to discuss more supportive measures, while China’s securities regulator said it will encourage more state-backed funds to buy into local markets.

The volley of good news helped improve some sentiment towards Chinese markets, which were nursing a severe underperformance through 2023 and so far in 2024. 

But the weak economic conditions that had spurred the rout in Chinese stocks still remained in play, raising doubts over just how long this rebound will last. Chinese inflation data for January is due on Thursday, and is expected to show little improvement. 

Hang Seng heavyweight Alibaba Group (NYSE:BABA) (HK:9988) is also set to report its quarterly earnings later in the day. The stock fell 0.5% in Hong Kong trade. 

Broader Asian markets advanced on Wednesday, with South Korea’s KOSPI rising 1.2% to a one-month high. The country’s current account surplus rose sharply in December, brewing some optimism over resilience in the economy.

Australia’s ASX 200 rose 0.6%, coming back in sight of a record high after hawkish signals from the Reserve Bank of Australia spurred some losses earlier this week. 

Japan’s Nikkei 225 was the sole outlier on Wednesday, losing 0.2% ahead of quarterly earnings from majors including SoftBank Group Corp. (TYO:9984) and Suzuki Motor Corp. (TYO:7269) on Thursday. 

Toyota Motor (NYSE:TM) (TYO:7203), the world’s largest automobile maker by sales, surged nearly 5% to a record high on Wednesday after it forecast a record-high annual profit on the back of stellar sales. 

The firm also said it  will take a minority stake in Taiwan Semiconductor Manufacturing Corp's (TW:2330) (NYSE:TSM) unit in Japan. TSMC shares jumped 1.7% in Taiwan trade. 

Futures for India’s Nifty 50 index pointed to a mildly positive open, as the index stabilized after tumbling from record highs over the past week. Focus was now on a Reserve Bank of India meeting on Thursday.