Asian stock markets were broadly higher in pre-holiday trade on Tuesday, as appetite for riskier assets was boosted amid mounting optimism over the health of the U.S. economy and after the People’s Bank of China injected liquidity to the financial system.
During late Asian trade, Hong Kong''s Hang Seng Index rallied 1.13%, Australia’s ASX/200 Index ended 0.67% higher, while Japan’s Nikkei 225 Index closed up 0.12%.
The Hong Kong market was due to close at midday and reopen Friday after the Christmas and Boxing Day holidays. Elsewhere, Japanese and Chinese markets will remain open on Christmas Day while the rest of the region will be closed.
Asia was given a positive lead from the U.S., where the Dow closed at a fresh record high, while the Nasdaq ended at its highest level in thirteen years.
The Commerce Department said Monday that U.S. personal spending rose 0.5% last month, in line with expectations and the highest since June.
The U.S. is to release data on durable goods orders later in the day, a leading indicator of production, as well as a report on new home sales.
In Tokyo, the Nikkei rallied to the highest level since 2007 before trimming gains as traders monitored movements in the currency market. USD/JPY rose to hit a daily high of 104.40, before pulling back to hit 104.18.
Index heavyweights Fast Retailing climbed 1.2%, while Softbank saw shares drop 1.2%.
Meanwhile, in Hong Kong, the Hang Seng rallied in a holiday-shortened session amid receding concerns over a cash crunch in the financial system. The PBOC injected USD4.7 billion through open-market operations for the first time in three weeks on Tuesday, sending borrowing costs to around 5.5%, well off the previous day’s high of nearly 9%.
China Minsheng Bank rose 1.2%, China Merchants Bank climbed 1.9%, while China Citic Bank advanced 1.7%. Investors have remained cautious over the level of bad debt at Chinese banks, particularly when interbank lending rates are high.
Elsewhere, in Australia, the ASX/200 Index climbed to the highest level since November 28 thanks to gains in the financial sector.
Commonwealth Bank of Australia added 0.5%, Westpac Banking Group advanced 0.7%, while Australia and New Zealand Banking Group and National Australia Bank rose 0.55% and 0.45% respectively.
Looking ahead, European stock market futures pointed to a steady open. Trading volumes are expected to remain light due to the Christmas holiday and as many traders already closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
The EURO STOXX 50 futures pointed to a gain of 0.1% at the open, France’s CAC 40 futures added 0.1%, London’s FTSE 100 futures indicated a gain of 0.2%, while Germany''s DAX futures pointed to an increase of 0.1%.
Across the Atlantic, U.S. equity markets also pointed to a flat open. The Dow Jones Industrial Average futures pointed to a gain of 0.05%, while the S&P 500 futures and Nasdaq 100 futures indicated a flat open.
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