Asia Markets: Asian markets continue upswing as global rebound continues

February 13
10:04 2018

The global rebound for stocks accelerated as Asian markets rose strongly Tuesday morning, with gains of at least 1% in a number of locales across the region.

Investors set aside any concern about the prospects of a mounting U.S. fiscal deficit and instead hunted for bargains after last week’s global equities swoon.

Hong Kong saw the biggest gains after a quick slide the last half-hour of trading on Monday erased the day’s advance. The Hang Seng Index HSI, +2.18%   was recently up 2.1% after falling nine of the past 11 trading days, and the H-share benchmark of China-based firms with equity listed in the city jumped 2.6%.

Chinese stocks were again strong, though large caps took the baton after gains of some 3% in smaller-cap indexes Monday. The Shanghai Composite SHCOMP, +1.80%   jumped 1.7%, and the big-cap CSI 300 bounced 2.1%.

The global market correction to start February left plenty of opportunities to find bargains, even though volatility is likely to persist, said Jennifer Wong, managing director of investor relations at Pinpoint Asset Management, a hedge-fund manager.

“When the market corrects like this, we think it’s a good thing. It allows us to look for stocks which we feel are unjustifiably low,” she added.

However, Wong noted that market activity has started to slow down ahead of the Lunar New Year holiday this weekend. The Stock Connect trading link between Hong Kong and China is closed from Tuesday until next week.

Mainland investors, which had been supporting the Hong Kong market with inflows of capital, withdrew some funds during the past two weeks. They won’t be able to trade stocks in the city until next Thursday.

Elsewhere, Japan’s Nikkei Stock Average NIK, +0.48%   finished morning trading up 1.3% after that market was closed Monday for a holiday. Financial companies were strong as higher lending costs are likely to increase margins for banks and improve insurers’ income.

U.S. borrowing costs have eased, falling from a four-year high hit Monday even as the Treasury Department said spending outstripped tax revenue in January. Ten-year Treasury yields were last at 2.856%, down from a Monday high of 2.902%.

Rising rates were one reason behind the recent global selloff for stocks, and analysts say rates could rise more as central banks normalize policy and the global economy continues its upswing.

The 10-year reaching 3% could trigger further market volatility, said Eugene Leow, a rates strategist at DBS. The bond’s yield bottomed out at 1.32% in July 2016. The 3% level was last reached in late 2013, “towards the end of the taper tantrum,” he said. But Leow said that is “a key technical resistance level that is unlikely to be breached.”

Indexes in Singapore STI, +1.44%   and South Korea SEU, +1.23%   were also up more than 1%, the latter helped by a 4.5% jump in index heavyweight Samsung Electronics 005930, +4.94%   that halved this month’s pullback in that stock.

In commodities, oil futures saw gains build in a repeat of Asian trading on Monday. Crude rose 2% before the rebound reversed by the New York settlement, resulting in Brent notching its seventh straight decline. The international oil benchmark was recently up 0.7% at $ 63 a barrel.

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