Extraordinary Rally Sweeps Across All Markets, Reports Reuters

By Jamie McGeever

A glance at the upcoming day in Asian markets reveals a landscape shaped by recent significant developments. Following an unexpected and assertive maneuver by the Bank of Japan, indications from the Federal Reserve that U.S. interest rates may soon decrease, and a remarkable surge in major U.S. tech stocks on Wednesday, investors might be seeking a break on Thursday.

However, finding calm may prove challenging.

The ongoing repercussions from the actions of the BOJ and Fed, along with the tech stock surge, are expected to influence all asset classes. Additionally, a series of manufacturing PMI reports from China and other Asian nations is set to be released, as investors also prepare for more earnings announcements from major tech players and a potential rate cut from the Bank of England.

Notably, Thursday marks the first trading day of the month, and investors may feel inclined to invest their capital. Wednesday’s spike in risk appetite, particularly in semiconductor stocks, could further energize market participants.

While volatility typically makes investors hesitant, current sentiment seems to welcome it. Take Nvidia, for instance—after a drop of 7% on Tuesday, the stock rebounded with a 13% rise on Wednesday, restoring its market capitalization above $3 trillion. This equated to a one-day market value increase exceeding $350 billion.

Wednesday’s market movements were likely linked to position adjustments coinciding with the month’s end, yet the scale of the changes was nonetheless remarkable. The Nasdaq experienced its strongest day since February of the previous year, while geopolitical tensions contributed to a 5% uptick in another major index, marking its best performance of the year. In the realm of precious metals, palladium stood out with a jump of 4%.

U.S. bond yields fell to their lowest levels since early in the year, influenced by the dollar’s decline against a surging yen, which, in turn, lowered its value against various G10 and emerging market currencies. The South Korean won achieved its largest rise this year, bolstered by strong earnings from Samsung and a rally in the chip market, while the Thai baht reached a four-month high.

This positive momentum is expected to carry over into Asia on Thursday, although the hawkish stance of the BOJ and the more balanced approach from the Fed—especially in comparison to recent statements from prominent former Fed officials—may temper the enthusiasm as the day progresses.

The yen and certain other currencies might be the most susceptible to a correction after their robust performance on Wednesday; the yen appreciated by 2% to surpass the 150.00 per dollar mark for the first time since March.

On the data front, the most pivotal releases are likely to be the manufacturing purchasing managers’ index (PMI) reports from China and across Asia. China’s official PMIs released on Wednesday indicated ongoing contraction in the manufacturing sector for July, while growth in the services sector also decelerated.

Key developments to watch that could influence market direction on Thursday include:

• Manufacturing PMIs from China and Asia for July
• Inflation data from Indonesia for July
• Trade figures from South Korea for July