Stocks Gain As Markets Hope For Dovish ECB, But May Be Optimistic
Asian Stocks Talking Points:
- Markets were broadly higher Tuesday
- Hopes for more loose policy may be helping
- Apple suppliers in the region got a lift
Find out what retail foreign exchange investors make of your favorite currency’s chances right now at the DailyFX Sentiment Page
Asia Pacific stock markets broadly higher on Wednesday as investors looked ahead to the European Central Bank’s monetary policy decision on Thursday.
The ECB is expected to strike quite a dovish tone, even if effectively guaranteeing ultra-loose monetary policy for some time to come is unlikely to appeal to all the national central bank leaders on the governing council. There may be some scope for market disappointment on the fact, therefore. Goldman Sachs calls the risk of such a let-down high.
There was more regional good news from Apple. Its suppliers got a boost around the region following the California titan’s unveiling of new products in the previous session. Taiwan’s Largan Precision rose by nearly 3%, with Hong Kong’s AAC and Japan’s Murata Manufacturing also higher.
The Nikkei 225 was up 1%, with Hang Seng 1.4% in the green. The ASX 200 added 0.2%. The Aussie tech sector saw some weakness, but it has made some strong gains this year so some profit-booking might not be surprising. The big four banks managed to rise.
Bloomberg reported that Hu Xijin, editor of the Global Times (run by state-owned People’s Daily) said that China will implement measures to ease trade war impact on the economy.
Yen Still Lacks Traction
A nervous ‘risk on’ mood prevailed in foreign exchange markets which of course are also eying the ECB. The counter-cyclical Japanese Yen continued to struggle against the US Dollar while the Euro made modest gains.
EUR/USD has certainly bounced at last Thursday’s two-year lows but it remains very clearly within the daily chart downtrend that has limited the market since late June.
The Australian Dollar managed gains despite news that consumer confidence fell this month.
ECB-guessing is likely to remain the markets’ main preoccupation for the remainder of the global session. The economic data calendar is quite full but its largely populated with second-tier events. Crude oil markets will look to US inventory levels from the Department of Energy.
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--- Written by David Cottle, DailyFX Research
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