Asia Markets

Asian stocks recover after Italian political concerns ease

Key Points
  • Asian stocks rose on Thursday as political drama in Italy eased.
  • Trade concerns were expected to remain in focus.
  • China official manufacturing PMI topped expectations.

Asia finished mostly higher on Thursday as global markets recovered after recent fears about Italy faded.

Japan's added 183.30 points, or 0.83 percent, to 22,201.82 while the Topix index gained 11.32 points, or 0.65 percent, to 1,747.45.

Australia's S&P/ASX 200 rose 27.2 points, or 0.45 percent, to 6,011.9 as most sectors finished higher. The energy sub-index gained 2.33 percent following higher oil prices overnight while the materials sector rose 1.5 percent.

In South Korea, the Kospi added 13.98 points, or 0.58 percent, to 2,423.01.

News of a meeting between U.S. Secretary of State Mike Pompeo and North Korean official Kim Yong Chol saw some North Korea-exposed stocks rise, with Hyundai Cement up 5.11 percent.


Elsewhere, Hong Kong's closed up 411.77 points, or 1.37 percent, at 30,468.56.

On the mainland, the gained 56.49 points, or 1.86 percent, to 3,097.93, following the release of better-than expected official manufacturing PMI data.

MSCI's index of shares in Asia Pacific excluding Japan edged up by 0.59 percent in Asia afternoon trade.

Italy concerns take back seat

Relief in global markets came amid news that Italy's interim prime minister, who had been appointed by President Sergio Mattarella, said possibilities had surfaced "for the birth of political government," Reuters reported. Still, some uncertainty remained after right-wing Lega party leader Matteo Salvini said an earlier vote was better to end confusion.

"While this leaves open the possibility that a new political government will be formed, a fresh election is a possibility and nerves about Italy staying in the euro remain," ANZ analysts said in a morning note.

U.S. stocks closed higher as jitters over political turmoil in Italy receded on Wednesday: The Dow Jones industrial average rose 1.26 percent, or 306.33 points, to close at 24,667.78. Other major U.S. stock indexes also gained.

Global markets had been spooked earlier in the week by the possibility of fresh elections in Italy being fought over its role in the European Union and the euro zone.

The euro held onto overnight gains, trading at $1.1663 at 12:38 p.m. HK/SIN. That was above the $1.15 handle seen during Asian trade on Wednesday.

Meanwhile, the yield on Italy's two-year bonds fell to 1.7 percent in the last session from 2.1 percent. Yields on safe-haven U.S. Treasury bonds, meanwhile, rose overnight amid the improvement in investor sentiment. The yield on the benchmark 10-year U.S. Treasury note stood at 2.848 percent.

In Europe, the pan-European Stoxx 600 added 0.3 percent and Italy's FTSE MIB bounced 2.09 percent after falling for the prior five sessions.

Trade issues also weighed on investors' minds after the White House announced earlier in the week that it would move forward on plans to subject some $50 billion in Chinese imports to tariffs. According to a Wall Street Journal report on Wednesday, China is "looking to line up other countries" against the U.S.

In currencies, the dollar was little changed against yen at 108.91 compared to its previous close of 108.90. That was above Tuesday's low of 108.12.

"Lingering concern on Sino-U.S. trade relationship before another round of negotiation given apparent disagreement in trade stance among U.S. officials could potentially cap upside movement" in the U.S. currency, Zhu Huani, an economist at Mizuho Bank, said in a note.

— CNBC's Sam Meredith contributed to this report.