Most of the shares in Asia ended higher after the opening bell on Tuesday amid the recovery of the US dollar. The Asian equities extended their gains after the quiet post-Christmas trade on Monday. Will the momentum stay until 2017?
At the time of writing, around 1632 stocks were rising on the Tokyo Stock Exchange with Nikkei 225 advancing 0.04 percent. The stocks from automobile and pharmaceutical industries headed the upward momentum.
The Yokohama Rubber Co., and the Furukawa Electric Co., advanced 2.57 percent to 2.53 percent respectively as the Japanese economy remained close to stability in the eyes of the Bank of Japan. Recently, Mr. Kuroda expressed his optimism over the slow-pace growth of Japan through its monetary policy framework. (See FSM News : USD/JPY Totters ahead BOJ Minutes )
On the other hand, Toshiba Corporation surprisingly posted a 12 percent decline as the concerns over its U.S. nuclear power acquisition loomed. Also, the US currency remained stronger against the yen with a 0.15 percent advantage.
Approximately 1400 stocks declined during the session earlier. The Nikkei Volatility added 1.90 percent to 18.28.
In the first quarter of 2016, the strength of the yen was considered as a headwind in the recovery of the entire Japanese yen as it affected the trade sector. Through the lower rates continuously implemented by the BOJ, the yen slowly found its way on the defensive track.
Soaring stocks in the Philippines were headed by the Property and Industrials segment with PSEi Composite rising 1.44 percent. Rising stocks included Universal Robina Corporation, Petron Corporation and Metro Pacific Investments.
Meanwhile, around 411 stocks dropped on the Taiwan Weighted as the shares in Information Services and Electricity Sectors plunged. The Taiwan Weighted only lost 0.01 percent, but falling stocks still outnumbered the rising ones.
In China, Shanghai SE composite Index lost 0.25 percent as well to 3,114.66 at 2:29 am Eastern Time while CSI 300 index slipped 0.1 percent. Although, there were stocks which declined, the losses were still manageable.
Elsewhere, the US dollar edged higher against a basket of currencies. EUR/USD ended 0.04 percent lower while GBP/USD lost 0.11 percent. USD/JPY advanced 0.20 percent and USD/CHF climbed 0.17 percent. The greenback traded 0.17 percent higher against the loonie, but, it lost 0.01 percent versus the Australian dollar.
In general, when the domestic equity markets rise, the market confidence rises as well. Strong market confidence may attract foreign investors and then eventually may boost the demand for the domestic currency. Nevertheless, this principle does not usually apply in the greenback and in the yen.
The interrelationship in the market is very complex. What seems to be apparent is the fact that Asian equities usually get affected with the economic trend of China and Japan. China, as the second largest economy affects the commodities, especially the precious metals. Japan, as the third largest economy, has a strong implication on technology worldwide, whether in automobile and or in electrical sectors.
For these reasons, most of the Asian shares would depend on the economic stability of their nation. In the case of the US dollar, it will likely remain bullish until the first quarter of 2017, which means a basket of currencies might suffer. Adding to the headwind in the global market is the upcoming negotiation over Britain’s “total” exit from the European Union.
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