Asian markets open higher on positive US data

Estimated read time 3 min read

Good news is good news on Tuesday, as another surprisingly strong showing in U.S. business activity boosted investor sentiment and risk appetite, which should pave the way for a positive opening in Asian markets on Wednesday.

Upbeat U.S. economic data tends to bolster expectations of a Fed rate hike, dragging stocks and other asset markets lower. But that wasn’t the case this time – investors were pleased with the unexpected expansion in manufacturing and service sector activity, and the gloom that has gripped markets of late dissipated.

Asian markets should follow suit as there is not much local data for traders to delve into – Australian consumer inflation for September and the third quarter is the only data that could have a significant impact on markets.

Asian markets open higher on positive US data

The three main US stock indexes closed up 0.6% to 0.9% as earnings reports from US tech giants Microsoft and Google’s parent company Alphabet beat expectations after the bell.

However, immediate investor reaction was mixed, with Alphabet’s cloud-based revenue falling short of analysts’ expectations, causing shares to fall more than 5% in after-hours trading, while Microsoft shares rose 4% after hours.

In Asia on Wednesday, South Korea’s LG Display reported quarterly results that are expected to show a decline in revenue. The Apple supplier has been in the red for the past five quarters, but hopes to turn a profit in the final quarter of the year.

In economic data, Australia’s annual consumer inflation is expected to slow to 5.3% in the third quarter, down from 6.0% in April-June.

On a monthly basis, however, inflation is expected to rise to 5.4% in September from 5.2% in August, which would mark the first time this year that inflation has risen for two consecutive months.

Reserve Bank of Australia Governor Michelle Bullock warned on Tuesday that inflation may be more stubborn than expected and that interest rates may have to rise further to allow inflation to pick up.

The Australian dollar bucked the trend against the U.S. dollar, leading inflation data stronger around $0.6360.

Chinese assets remained under pressure despite the blue-chip CSI 300 index ending a four-game losing streak and rebounding from Monday’s four-and-a-half year lows.

Meanwhile, there’s still plenty of China-related policy and political news for investors to digest.

China’s Supreme People’s Congress approved the issuance of 1 trillion yuan in sovereign bonds, and Beijing appointed Lan Fu’an, a technocrat who lacks experience in central government, as its new finance minister.

Chinese President Xi Jinping’s first visit to the country’s central bank since he became president a decade ago was also seen by some as a reflection of the government’s focus on supporting the economy.

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