Asian Markets Recover as Italian Political Concerns Ease

Asian markets rebounded from a two-month low on Thursday as global markets recovered after recent fears about Italy faded.

Japan’s Nikkei 225 index rose 0.83 percent or 183.30 points at 22,201.82 amid broad-based gains. Along with Australia’s S&P/ASX 200 which advanced 0.45 percent or 27.20 points to trade at 6.011.90, the index’s energy sector stocks traded higher after oil gained 2 percent overnight. The Topix gained 0.65 percent or 11.32 points to close at 1,747.45. The oil and coal products sub index were up 3.5 percent.

Going to China, Hong Kong’s Hang Seng Index tacked on 0.95 percent or 286.30 points at 30,343.09. The energy sector stocks lead the gains. Mainland China’s Shanghai Composite gained 1.67 percent or 58.86 points at 3,091.59 following the release of better-than expected official manufacturing PMI data.

Meanwhile, South Korea’s Kospi Index rose 0.58 percent or 13.98 points at 2,423.01 from its previous close at 2,409.03. Hyundai Cement climbed 4.34 percent amid news of a meeting between US Secretary of State Mike Pompeo and North Korean official Kim Yong Chol which exposed gains on North Korean stocks.

Overall, MSCI’s index of shares in Asia Pacific excluding Japan edged up by 0.59 percent in Asian afternoon trade.

The Dow Jones Index rose 1.26 percent to 24,667.78, and the S&P 500 climbed 1.27 percent to 2,724.01.

Italy Concerns Subside


Italian stocks bounced back 2.1 percent. However, it had given up all the gains made in 2018.

Global stocks battered, safe-haven government bond yields fell sharply as the euro tumbled in the early week trade after Italy’s two anti-establishment parties scrapped plans to form a coalition. As a result, a prospect of a general election was raised. This stoked fears such a vote will effectively be a referendum on the country’s euro membership.

Recently, the country’s two anti-establishment parties renewed efforts to form a coalition government instead of putting Italy into holding elections for the second time this year.

Furthermore, Italy’s auction of five and ten-year government bonds resulted in biggest one-day surge for two-year yields in 26 years. It assuaged concerns about the country’s ability to finance itself after turbulence in the debt market.

“The financial markets had been able to assess and digest the situation in Italy over the past few days and it is now time for a bit of reprieve from the turbulence,” senior strategist at Tokyo’s Sumitomo Mitsui Asset Management Masahiro Ichikawa said.

“The reprieve will allow the market to return their focus back on fundamentals, such as Friday’s U.S. non-farm jobs report.”

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