Asian markets surge, Sensex follows: why global cues fueled today’s rally
A broad Asian equities rally, led by a rebound in technology and chip stocks, spilled over into Indian markets on Wednesday as the Sensex climbed 553 points and the Nifty crossed 24,200.
Asian equities rallied broadly on Wednesday after softer-than-expected US inflation data strengthened expectations that the Federal Reserve may adopt a less aggressive monetary policy stance in the coming months. MSCI’s Asia Pacific equities gauge climbed 2%, on course for its biggest gain in a month, with technology stocks leading the advance. South Korea’s Kospi surged around 7%, while Japan’s Nikkei 225 and Hong Kong’s Hang Seng also traded higher, even as Shanghai’s SSE Composite lagged behind.
The rebound in technology shares was a key driver of the region-wide move. SK Hynix jumped 11%, while a broader Asian semiconductor index gained 3.5% as investors returned to chipmakers after a recent stretch of volatility. Kazuhiro Sasaki, head of research at Phillip Securities Japan, said ‘volatility has died down and we’re seeing some repurchasing in the chip sector. But rather than a full-blown return to tech, we’re seeing sector rotation continue — banks are attractive, especially after strong earnings in the US.’
The optimism traced back to Tuesday’s US inflation print. US consumer price inflation eased to 3.5% in June, below the market expectation of 3.8%, reinforcing hopes for a less aggressive Fed policy stance. US markets closed higher overnight, with the S&P 500 rising 0.38% and the Nasdaq advancing 0.90%.
India rode the same wave. The BSE Sensex jumped 553 points to 77,603.57 in early trade, and the NSE Nifty gained 148.15 points to 24,198.40, reversing Tuesday’s session in which the Sensex had dropped 561.46 points, or 0.72%, to close at 77,054.94.
Geopolitical cues added further support after Trump withdrew a proposed 20% transit fee on cargo passing through the Strait of Hormuz in favour of trade and investment agreements with Gulf countries, easing pressure on Brent crude, which settled around $85.6 a barrel.
Rajesh Palviya, head of research at Axis Direct, said supportive global cues and expectations of a more accommodative Federal Reserve policy helped improve investor sentiment, with the Nifty continuing to hold above its key 23,900 support level.
Bombay Stock Exchange building at Dalal Street, Mumbai. Wikimedia Commons/by BSEINDIA (CC BY-SA 3.0).
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