Asia Markets

Asian shares soar on firm US lead; BOJ holds steady

Key Points
  • Major Asian indexes recorded significant gains on Tuesday
  • The U.S. House of Representatives and Senate on Monday passed a bill to reopen the government following a brief shutdown
  • The Bank of Japan held monetary policy steady
  • South Korea's LG Electronics closed with gains after initially sliding on news about U.S. tariffs targeting certain washing machines

Major Asian indexes closed with significant gains on Tuesday following the stronger lead from Wall Street after U.S. lawmakers reached a deal to end a government shutdown. Investors also digested the Bank of Japan's decision to keep monetary policy steady.

Japan's Nikkei 225 rose 1.29 percent, or 307.82 points, to close at 24,124.15, after touching its highest levels in more than 26 years earlier in the day.

Automakers recorded gains in the session: Toyota closed up 0.79 percent, Honda jumped 1.81 percent and Mitsubishi Motors tacked on 2.39 percent. Technology names were also mostly higher, with SoftBank Group advancing 2.02 percent and Sony rising 2.87 percent.

BOJ holds steady

The Bank of Japan on Tuesday held monetary policy steady following a two-day meeting — a move that was widely expected.

The dollar edged up against the yen on Tuesday afternoon. The greenback rose to trade at 111.15 at 3:02 p.m. HK/SIN as BOJ Governor Haruhiko Kuroda gave his post-meeting briefing. Kuroda appeared to talk down the possibility of a change in policy, with Reuters quoting the central banker as saying the economy was not in a situation for the BOJ to consider exiting its ultra-easy policy

The dollar had earlier fallen as low as 110.56 after the central bank's initial statement was released.

The central bank's move to slightly trim its purchases of Japanese government bonds earlier this month led to some speculation about potential tightening — although the move away from ultra-easy policy is seen as some ways away by some in the market

Across the Korean Strait, the Kospi added 1.38 percent to close at 2,536.60 despite automakers slipping into negative territory during the session.

Shares of LG Display closed up 5.85 percent after the company reported fourth-quarter earnings fell 95 percent from a year ago, as other tech names traded mostly higher. That move higher came as the company announced it would manufacture plastic OLED panels at a new line later this year, Reuters reported.

LG Electronics, meanwhile, finished the session higher by 0.46 percent after earlier falling more than 2 percent following news President Donald Trump had approved tariffs on certain washing machines. Samsung Electronics, which also produces washing machines, was higher by 1.91 percent.

The South Korean government said it would raise the matter to the World Trade Organization, characterizing the U.S. move as "excessive."

Over in Sydney, the S&P/ASX 200 climbed 0.75 percent by the end of the day on strength in the energy sector, with Santos gaining 1.17 percent in the morning. The financials sector, which had broadly declined in the last session, rose 0.78 percent on Tuesday.

Positive sentiment was also seen in greater China markets. The rose 1.56 percent by 3:07 p.m. HK/SIN after touching an all-time high for the fifth consecutive session earlier in the day.

Financials, which are heavily-weighted constituents on the index, were mostly in positive territory: HSBC rose 0.65 percent, insurer AIA advanced 1.06 percent and China Construction Bank was up 4.64 percent ahead of the market close. Casino stocks traded significantly higher too. Galaxy Entertainment rose 1.82 percent and Sands China was higher by 1.25 percent at 3:08 p.m. HK/SIN.

Mainland markets also saw gains. The advanced 1.3 percent to finish at 3,546.98 and the Shenzhen composite rose by a more moderate 0.36 percent to end at 1,950.99. The blue chip CSI 300 index closed the session higher by 1.08 percent, with financials and real estate among the top-performing sectors on the day.

U.S. stocks closed higher on Monday, paring early losses after the Senate reached a short-term compromise to end a government shutdown that began last week. The stopgap bill approved by the Senate on Monday will keep the U.S. government open through Feb. 8.

The House of Representatives subsequently voted and passed the bill to reopen the government, which Trump subsequently signed into law.

The Dow Jones industrial average advanced 0.55 percent, or 142.88 points, to close at 26,124.60. The S&P 500 and Nasdaq composite both touched record highs before closing nearly 1 percent higher on the day.

"[N]ews of a deal to re-open the government has predictably been offered as an excuse for yet new record highs being chalked up," but a better reason for the gains was likely the "ongoing lifting of earnings expectations by stock market analysts, driven in large by assessment of the tax deal and ... ongoing slippage in the dollar," Ray Attrill, head of foreign exchange strategy at National Australia Bank, wrote in a morning note.

In currencies, the dollar index, which tracks the U.S. currency against six peers, was mostly steady at 90.437 at 2:58 p.m. HK/SIN.

The Australian dollar fell back below the $0.80 mark to trade at $0.7982 after trading as high as $0.8029 earlier.