Asian stocks: Nikkei rises after BOJ; China rebounds on stimulus hopes

Investing.com– Most Asian stocks rose on Wednesday with Chinese markets rebounding from five-month lows as middling economic data fueled bets on more stimulus measures, while Japanese markets turned positive following mixed signals from the Bank of Japan.

Asian technology and chipmaking stocks rallied, tracking strong earnings from Advanced Micro Devices Inc (NASDAQ:AMD). 

Regional markets also brushed off a weak overnight close on Wall Street, with U.S. stock indexes closing lower in anticipation of a Federal Reserve interest rate decision later in the day. 

But U.S. stock index futures rose in Asian trade, with a rally in chipmaking stocks largely offsetting a decline in heavyweight tech stocks, after Microsoft Corporation (NASDAQ:MSFT) missed some estimates with its June quarter earnings. 

Japanese stocks turn positive on mixed BOJ signals

Japan’s Nikkei 225 index rose 0.4%, while the TOPIX rose 0.3% after the Bank of Japan hiked interest rates by 15 basis points- the upper end of analysts estimates.

But the central bank said it will only halve its current pace of Japanese government bond buying- to 3 trillion yen ($19.5 billion) by early-2026. The BOJ will reduce its pace of monthly bond purchases by 400 billion yen every quarter.

BOJ were also seen cutting their forecasts for economic growth and inflation in fiscal 2024.

The extended timeline for cutting bond purchases, coupled with a softer outlook for near-term growth and inflation sparked bets that Japanese monetary policy will remain mostly accommodative in the near-term. Such a scenario presents a positive outlook for Japanese stocks.

Chinese stocks rebound, soft PMIs fuel stimulus bets 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes jumped over 1% each and were the best performers in Asia on Wednesday. Both indexes rebounded from their weakest levels since February, and were nursing steep losses through July. 

Purchasing managers index data for July showed sustained weakness in business activity, with the manufacturing PMI shrinking for a third straight month. 

But the reading ramped up bets that Beijing will be forced into unlocking more stimulus measures, especially after the government presented a supportive stance during the Politburo meeting on Tuesday. 

While the meeting yielded few actual details on the planned stimulus measures, investors took some encouragement from Beijing explicitly stating it will work to improve consumer confidence. 

Asian tech, chipmakers surge despite Microsoft earnings 

Tech-heavy Asian bourses logged strong gains on Wednesday, with Hong Kong’s Hang Seng rallying 1.6%, while South Korea’s KOSPI rose 0.5%. 

Tech stocks- particularly chipmakers, rose tracking strong earnings from AMD, which beat expectations and forecast strong revenue growth on demand from artificial intelligence.

But this trend was somewhat offset by middling earnings from Microsoft. While the firm’s profit beat expectations, the company’s cloud business- which is a barometer for AI demand- clocked slower-than-expected revenue growth. 

Among broader Asian markets, Australia’s ASX 200 index surged 1.3% and came close to a record high after data showed underlying consumer price index inflation grew slightly less than expected in the second quarter. 

The reading ramped up bets that cooling inflation will keep the Reserve Bank of Australia from raising interest rates any further. 

Futures for India’s Nifty 50 index pointed to a positive open, with the index remaining in sight of record highs above the closely watched 25,000 level.