TOKYO (Reuters) – Asian stocks retreated from their 20-month lows on Wednesday thanks to the recovery on Wall Street, although investors remained cautious after a month in October, when global equity markets fell sharply.
FILE PHOTO: Visitors look at a Stock Market Stock Exchange at the Tokyo Stock Exchange in Tokyo, Japan, October 11, 2018. REUTERS / Issei Kato
A confluence of Sino-US factors has led tensions between the US and concerns about US corporate earnings to the end of light money in developing countries to financial market volatility in recent weeks.
The broadest MSCI index for Asia-Pacific outside Japan rose 0.75 percent, but was still down 11 percent this month.
The index fell to its lowest level since February 2017 on Monday as corporate profit worries weighed heavily on US equities.
Wall Street's three stock indexes rose more than 1 percent on Tuesday, helped by strong gains in chip and shipping stocks as investors took advantage of favorable prices following the recent sharp pullback in equities. [.N]
Hang Seng in Hong Kong rose 1 percent and the Shanghai Composite Index climbed 0.75 percent, with gains made despite weak factory activity data for the month.
Australian equities rose 0.3 percent, the South Korean KOSPI 0.1 percent and the Japanese Nikkei 1.3 percent.
"The recent decline in equities has been so strong that it has invited buyers such as the Japanese stock market," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
The MSCI AC World index, which includes some major emerging economies alongside developed markets, slipped 8.5 percent this month, losing around $ 4 trillion. The smaller MSCI World Index fell 8.7 percent, losing $ 4.5 trillion in October.
Ichikawa of Sumitomo Mitsui Asset Management said the market outlook remains gloomy and that the US-China trade dispute will "probably remain a worrying factor even after the US midterm elections."
US President Donald Trump said in an interview with Fox News late Monday that he believes there may be an agreement with China on trade. But he also said he has new billions worth of dollars available if a deal is not possible.
In currencies, the Dollar Index extended overnight earnings gains against a basket of six major currencies, rising to a 16-month high of 97,054, after Tuesday's data showed consumer confidence in the US rose to an 18-year high in October is what suggests continued economic growth in the near future.
The dollar rose to a three-week high of 113,330 yen.
The yen's immediate focus was on the Bank of Japan's political decision, due later in the day.
Later on Wednesday, the BOJ will keep monetary policy steady and maintain its optimistic outlook on economic prospects, even as global trade disputes, fears of growth and volatile markets prevent them from achieving their elusive inflation target.
The euro was little changed at $ 1.1345, having lost 0.25 percent the previous day. A drop below $ 1.1336 would bring the single currency to its lowest level since mid-August.
China's yuan was trading at 6.9652 dollars in onshore trading, but remained near a decade low of 6.9724 (Tuesday).
The yuan has been weighed down by fears of slowing Chinese economic growth and a possible sharp escalation in the US and Chinese trade wars.
The Australian dollar fell 0.3 percent to $ 0.7083, impacted by weak domestic inflation data. China's weak growth data in October also weighed on the Aussie.
The oil price rebounded slightly after plummeting to a multi-month low the previous day, amid signs of rising supply and concerns that global economic growth and demand for fuel will fall victim to the US-China trade war. [O/R]
US crude oil futures rose 0.4 percent to $ 66.44 a barrel, down to $ 65.33 on Tuesday, their lowest level since mid-August.
Brent crude rose 0.53 percent to $ 76.31 a barrel, down 1.8 percent on Tuesday.
Additional reporting by Swati Pandey in Sydney; Processing of Sri Navaratnam