James Hyerczyk
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Asia-Pacific Shares

The major Asia-Pacific stock indexes are expected to open higher on Wednesday, following Wall Street’s lead. Investors are hoping to build on the strong gains attained the previous session.

Stocks in the region advanced on Tuesday following another overnight jump on Wall Street. Gains were driven by a strong performance in Hong Kong. The Taiex in Taiwan also saw strong gains as it rose 2.27% to close at 15,760.05.

Tuesday’s Cash Market Performance

In the cash market on Monday, Japan’s Nikkei 225 Index settled at 28362.17, up 271.12 or +0.97%. Hong Kong’s Hang Seng Index finished at 29248.70, up 355.84 or +1.23% and in South Korea, the KOSPI closed at 3096.81.

In China, the Shanghai Index settled at 3533.68, up 28.40 or +0.81% and in Australia, the S&P/ASX 200 Index finished at 6762.60.


Hong Kong Stocks Climb on Sustained Mainland Demand

Hong Kong stocks ended higher on Tuesday, underpinned by consumer and industrial firms, as mainland investors continued to pour money into the Asian financial hub.

Leading the gains, the Hang Seng consumer discretionary index and Hang Seng industrials index closed up 3.2% and 4.3%, respectively.

Mainland investors on Tuesday bought a net HK$17 billion worth of Hong Kong stocks via the Stock Connect linking mainland and the Asian financial hub, extending their buying spree. In January, their southbound purchases totaled HK$310 billion the highest on a monthly basis, according to HKEX.

Sentiment Boosted in China by PBOC

Sentiment got a boost as China’s central bank, the People’s Bank of China (PBOC), injected liquidity, easing worry over persistently tight liquidity.

China’s short-term money rates eased to two-week lows, as signs of liquidity tension in the interbank money markets started to fade. The PBOC injected a net 78 billion Yuan ($12.08 billion) into money markets.

Adding to market optimism, China reported the fewest new COVID-19 cases in a month as imported cases overtook local infections.

RBA Keeps Cash Rate Steady, Surprises with Additional QE

The Reserve Bank of Australia (RBA) on Tuesday announced its decision to maintain its cash rate at 0.1% as well as purchase an additional 100 billion Australian Dollars of bonds (approx.. $76.32 billion).

In a statement, RBA Governor Philip Lowe said:  The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.”

“For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labor market,” Lowe said. “The Board does not expect these conditions to be met until 2024 at the earliest.”

For a look at all of today’s economic events, check out our economic calendar.

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