Asia-Pacific Markets Surge as Hong Kong Stocks Jump 3%, Yen Strengthens

Shares in the Asia-Pacific region traded higher on Wednesday, following the positive lead from Wall Street. Stocks were boosted by strong earnings reports and a positive consumer confidence reading.

Hong Kong's Hang Seng index rose 2.7% on Wednesday, with property and technology stocks leading the way. In mainland China, the Shanghai Composite index shed 0.46% and the Shenzhen Component was down 0.33%.

The S&P/ASX 200 was up 0.53% to 7,152.5 on Wednesday as Australia’s foreign minister Penny Wong met her Chinese counterpart Wang Yi. The two agreed to “restart dialogue” on trade and economic issues.

Japan’s Nikkei 225 index rose 0.46% to 26,507.87, while the Topix index gained 0.78% to 1,908.17. The Japanese yen strengthened further against the U.S. dollar, trading at 131.94 yen per dollar.

The Kospi in South Korea gained 1.19% 2,356.73 as the nation’s annualized producer price index for November reached its lowest reading in 19 months. This is good news for the economy, as it indicates that inflationary pressures are easing.

Cryptocurrencies rose slightly after Gary Wang, co-founder of embattled FTX, and Caroline Ellison, co-CEO of Alameda Research, pleaded guilty to federal charges.

According to Coin Metrics, Bitcoin rose 0.15% in the past 24 hours to trade at $16,826. Ether rose 0.34% to $1,210.72.

Other digital coins like Cronos and Cardano also saw significant gains.

Last week, Sam Bankman-Fried, the former CEO of FTX, was arrested on eight federal criminal charges.

Oil prices rose as the U.S. National Weather Service issued a warning for "dangerous cold" temperatures over the next few days.

Brent crude futures rose slightly to $82.63 a barrel, while U.S. marker West Texas Intermediate futures traded up slightly at $78.79 a barrel.

The end-of-year holiday travel season is expected to drive up jet fuel consumption.

Australia and China have agreed to resume talks on trade and bilateral relations, according to a joint outcomes statement released by Australia. Foreign Minister Penny Wong and her Chinese counterpart Wang Yi agreed on the need for continued dialogue and cooperation between the two countries.

The meeting will take place after a long period of no dialogue, as China introduced trade sanctions on Australian barley in May 2020 and wine in March 2021.The two leaders also discussed international security, trade blockages, climate change and human rights, the statement said.

Shares of Chinese property developers listed in Hong Kong rose after the China Securities Regulatory Commission pledged to support the real estate industry.

The CSRC has promised to put bond financing plans into action and provide credit support for the sector.

Logan Group surged 7.38% in morning trading, while Country Garden and CIFI Holdings rose 0.75% and 4.55%, respectively. Longfor Group was up 3.35%.The central bank of China has announced that it will take measures to support the country's steel industry. This includes guiding financial institutions to provide financing for deals and restructuring within the industry.

The International Monetary Fund has voiced its support for the Bank of Japan's latest decision to widen its band of yield curve control tolerance. This move is seen as a positive step in ensuring stability in the Japanese economy.

Ranil Salgado, the mission chief to Japan at the IMF, said that the Bank of Japan's adjustment of yield curve control settings is a sensible step given concerns about bond market functioning and uncertainty around the inflation outlook.

Salgado believes that by improving communications around modifications to the central bank's monetary policy, the BOJ could improve its credibility and help anchor market expectations.

Destination Wealth CEO Michael Yoshikami said he expects market volatility to continue in 2023, but investors should not stay on the sidelines. He believes that there are opportunities for growth in spite of the volatility.

"The key is to be boring," he said. "The alternative is to pull your money out of the market and put it in cash until the market comes back. This is a way for you to safely still be in the market in more defensive names while still being able to participate in the market if it rises."

He identified six large-cap stocks that investors can use as a safe haven.

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South Korea's producer price index (PPI) for November grew by 6.3% compared to the same month a year ago, marking the slowest growth since April 2021. This marks the fifth consecutive month of declines in the PPI.

The index has fallen by 0.2% compared to a month ago, driven by a decline in agricultural product prices.

The producer price index (PPI) is a measure of the price companies receive for their products. It is a key indicator of inflation and can be used to predict future price movements.

The Conference Board's consumer confidence index rose to 108.3 in December from 101.4 in November, exceeding a StreetAccount consensus estimate of 100.5. The number was also the index's highest since April.

Inflation expectations declined in December to their lowest level in nearly two years, as falling gas prices helped offset other rising costs. Vacation plans improved, but consumers' appetite for big-ticket purchases like homes and appliances cooled further.

According to Franco, consumers will continue to prefer services over big-ticket items in 2023, and inflation and interest rate hikes will remain headwinds.

Stocks continued to rise on Wednesday, following strong earnings results from Nike and FedEx. This positive news helped to offset some of the concerns that have been plaguing the market recently, and investors remain hopeful that the positive momentum will continue.

The Dow Jones Industrial Average gained 526.74 points on Tuesday, or 1.6%, to finish at 33,376.48. The S&P 500 surged 1.49% to settle at 3,878.44, while the Nasdaq Composite jumped 1.54% to end at 10,709.37.