Markets across Asia rallied Tuesday, with shares in Japan rising on bets that its central bank may further loosen monetary policy at its meeting this week.
The Nikkei 225 index continued its recent rally, gaining 180.61 points, or 1%, Tuesday to 18,186.10,
The Hang Seng index in Hong Kong tailed off 22.88 points, or 0.1%, to 21,831.62
Japanese stocks are likely helped by growing expectations for continued accommodative monetary policy in the U.S. and more moves from Japan
The Japanese yen was flat against the U.S. dollar, having fallen Tuesday to as weak as ¥120.56 to the U.S. dollar.
While doubts about the pace of recovery in the U.S. have pressured the dollar recently, the prospect of a longer period of lower rates lifted global sentiment this week.
The region was continuing a rally from Monday, after a U.S. jobs report last week cooled expectations that the Federal Reserve would raise interest rates soon. U.S. stocks rose sharply overnight, with the S&P 500 which jumped 1.8%, notching its biggest five-day percentage gain since 2011. It is up 5.6% over the period.
A historic trade agreement by the U.S., Japan and 10 other countries was also positive backdrop for the region. The Trans-Pacific Partnership agreement, reached Monday, is expected to open agricultural markets in Japan and Canada, tighten intellectual property rules to benefit drug and technology companies, and establish a tight-knit economic bloc to challenge China’s influence in the region.
The deal comes at a critical time for Australia as the resource-rich nation tries to wean itself off its reliance on industrial commodities to power growth. The bloc doesn’t include China, Australia’s biggest trade partner, but encompasses around 40% of the global economy.
At its policy meeting Tuesday, Australia’s central bank opted to keep its benchmark interest rate unchanged at a record low of 2.0%. Meanwhile, the Australian dollar rose to above $0.71 after Gov. Glenn Stevens took a somewhat optimistic tone about the country’s growth prospects in a statement after the meeting.
The Australian dollar was at $0.7082 U.S. just before the statement, and was last up 0.5% against the U.S. dollar in Asia trade at $0.7118 U.S.
Financial markets are betting the bank will announce a further two cuts over the next year amid falling business investment and weak consumer confidence.
Mainland Chinese markets continued with national holidays, and will remain closed till Thursday.
In other markets
In Korea, the Kospi index added 12.4 points, or 0.6%, to 1,990.65
In Taiwan, the Taiex Index picked up 41.74 points, or 0.5%, to 8,394.10
In Singapore, the Straits Times Index hiked 46.16 points, or 1.6%, to 2,897.41
The NZX 50 tacked on 37.57 points, or 0.7%, to 5,668.11
The ASX 200 Index moved up 16.87 points, or 0.3%, to 5,167.40
