Regional equities received a positive boost from Wall Street’s performance, with U.S. stock indices hitting all-time highs on Friday, driven by significant gains in the technology sector. The surge in tech investments was primarily motivated by expectations of a growing demand for advancements in artificial intelligence, fueling optimism for the sector’s future prospects.
Leading the charge in this optimistic sentiment were Japanese stocks, particularly the Nikkei 225, which soared by 1.2% to reach a new 34-year peak. Simultaneously, the broader TOPIX index climbed 0.7%, marking its highest level since 1990.
Yamaha Motor Co Ltd (TYO:7272) emerged as the top performer on the Nikkei, experiencing a remarkable 5.4% surge following its announcement of the acquisition of Torqeedo, an electric motor manufacturer, from Germany’s Deutz AG (F:DEZG). This strategic move signals Yamaha’s intent to expand its presence in the electric vehicle market, showcasing a shift towards sustainable transportation solutions.
The overall strength in the Japanese stock market was underpinned by the prevailing belief that the Bank of Japan would maintain its accommodative monetary policy stance following the upcoming meeting scheduled for Tuesday.
The dovish stance adopted by the Bank of Japan played a pivotal role in supporting the Japanese markets, as the country’s monetary policies remained exceptionally loose compared to other major central banks that had initiated rate hikes in recent years.
Furthermore, major Japanese technology companies, especially those involved in the semiconductor industry, witnessed notable gains. Advantest Corp. (TYO:6857) and Tokyo Electron (TYO:8035) saw their shares rise by 3% and 1% respectively, reflecting the positive sentiment towards the tech sector.
Across broader Asian markets, the tech sector led the way in driving gains, with TSMC (TW:2330) (NYSE:TSM), the world’s largest contract chipmaker, providing an optimistic outlook for 2024 due to the increasing demand fueled by artificial intelligence technologies. This positive outlook from TSMC had a ripple effect on global chipmaking stocks, sustaining the upward momentum.
In South Korea, major chipmakers such as Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660) also recorded modest gains, contributing to the resilience of the tech sector amidst speculations that the Federal Reserve might maintain higher interest rates for an extended period. The ASX 200 in Australia advanced by 0.5%, supported by the tech sector’s strength, despite a downturn in major mining stocks.
Conversely, Chinese equities diverged from the regional trend, trading flat to lower amid concerns about a decelerating economic recovery in the country. While the blue-chip Shanghai Shenzhen CSI 300 index saw a marginal increase from a near five-year low, the Shanghai Composite index experienced a 0.5% decline. Mainland stock losses weighed on Hong Kong’s Hang Seng index, pushing it down by 1.4% to a fresh 15-month low.
Chinese stocks faced significant challenges in 2023 due to the sluggish post-COVID economic rebound, a trend that persisted into 2024 as recent data continued to reflect economic weaknesses. The People’s Bank of China maintained its benchmark loan prime rate at historically low levels on Monday, indicating limited room for further monetary easing to stimulate economic growth.
In India, markets remained closed for a special holiday commemorating the inauguration of a temple in North India. Futures for the Nifty 50 index hinted at further weakness following a recent wave of profit-taking. Concerns lingered among traders regarding potential communal tensions related to the temple’s inauguration, which has been a sensitive issue impacting Hindu-Muslim relations in the country.
