A wave of cautious optimism swept through Asia-Pacific markets on Wednesday, with most major indices posting gains as investors carefully evaluated the latest developments in US-China trade discussions.
The positive sentiment was largely an echo of Wall Street’s recent rally, sparked by easing trade tensions between the globe’s two largest economies.
Across the region, equity benchmarks reflected the improved mood, though with some variations.
Japan’s benchmark Nikkei 225 bucked the broader trend, slipping a marginal 0.14% to close at 38,128.13, relinquishing earlier gains after an impressive four consecutive sessions of advances.
In contrast, South Korea’s Kospi surged 1.23% to finish at 2,640.57.
Further south, Australia’s S&P/ASX 200 edged up 0.13% to close at 8,279.6.
The gains were more pronounced in Chinese markets, with Hong Kong’s Hang Seng Index climbing a robust 2.3% to close at 23,640.65, while mainland China’s CSI 300 rose 1.21% to end the day at 3,943.21.
This upward momentum in Asia found its roots in the US market’s strong performance earlier in the week, where stocks surged, evidenced by the Dow gaining more than 1,000 points on Monday following news of a temporary truce on tariffs.
A note of caution: trade resolution realities
However, not all market observers share an unbridled optimism.
Strategists at Julius Baer expressed a more circumspect view, stating that the bank “does not share the prevailing optimism” regarding a swift and comprehensive resolution to the ongoing trade conflict.
In a note released on Tuesday, the bank elaborated, “Even if new deals are announced, they are likely to involve complex conditions and protracted implementation timelines, making a full rollback of tariffs to pre-conflict levels unlikely.”
Chip stocks surge on AI deal buzz
A specific pocket of strength was evident in Asian chip-related stocks.
These shares received a boost after US semiconductor giant Nvidia saw its stock jump.
The catalyst was CEO Jensen Huang’s remarks confirming that the company will sell more than 18,000 of its latest artificial intelligence chips to Saudi firm Humain, a new AI startup backed by the country’s Public Investment Fund.
Looking ahead, US stock futures were little changed as Wall Street aimed to build on its strong start to the week.
Futures tied to the S&P 500 were flat, as were Nasdaq 100 futures, while Dow Jones Industrial Average futures saw a minor addition of 30 points, or less than 0.1%.
This followed a mixed session overnight stateside, where the S&P 500 rose 0.72% to close at 5,886.55, clawing back into positive territory for the year, and the Nasdaq Composite climbed 1.61% to end at 19,010.08.
The Dow Jones Industrial Average, however, lagged, losing 0.64% primarily due to a nearly 18% drop in shares of UnitedHealth.
Sensex gains 182 pts, Nifty above 24,650
Meanwhile, in India, the trading narrative was more nuanced. Benchmark indices relinquished their early gains to trade lower for a period on Wednesday, as profit-taking in key financial and FMCG shares exerted downward pressure.
Rising crude oil prices and somewhat subdued global cues further tempered investor sentiment during parts of the session.
After impressively surpassing an intraday high of over 500 points earlier, the BSE Sensex experienced a significant swing, tumbling 781.84 points from its peak before recovering.
Similarly, the broader Nifty index slipped below the crucial 24,600-mark during intraday trading before also staging a comeback.
Most sectoral indices pared their initial gains, with the Nifty Bank index notably turning red for a time.
Shares of Cipla, Asian Paints, Power Grid Corporation, Tata Motors, and Kotak Mahindra Bank were among the notable losers, declining up to 2 percent at their lows.
By the closing bell, however, the Indian benchmarks managed to secure gains.
The Sensex finished up 182.34 points, or 0.22 percent, at 81,330.56, and the Nifty advanced 88.55 points, or 0.36 percent, to 24,666.90.
Market breadth was positive, with approximately 2,749 shares advancing, 1,085 shares declining, and 134 shares remaining unchanged.
Among the major gainers on the Nifty were Tata Steel, Shriram Finance, Bharat Electronics, Hindalco Industries, and Eternal. Conversely, losers included Asian Paints, Cipla, Tata Motors, Kotak Mahindra Bank, and NTPC.
Broader market indices outperformed their mainline counterparts, with the BSE Midcap index rising 1 percent and the Smallcap index gaining 1.6 percent.
Sector-wise, all indices except for banking ended in the green, with realty, oil & gas, telecom, media, IT, and metal indices posting gains ranging from 1 to 2.5 percent.
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