Hong Kong’s Hang Seng index is on track for another intra-day gain of more than 1% this afternoon, and is now up an impressive 3.9% for the week.
It follows another strong gain yesterday which pushed the index to a two-year high above 26,000.
Asian markets are getting the positive flow-on effects from Federal Reserve chair Janet Yellen’s comments to US Congress overnight, which were interpreted as being more dovish in nature.
While Yellen’s comments didn’t alter the market’s expectation that the US Fed will raise rates once more by the end of the year, she made it clear that policy makers are keeping a close eye on US inflation. The failure of US inflation to rise materially will likely slow the pace of reversal from the US Fed’s current monetary policy stance.
A more accomodative monetary policy tends to push bond yields lower, which in turn has a positive effect on stocks. The inverse is true when bond yields rise, as global capital moves back into the bond market.
While all stock markets in the Asia-Pacific are posting gains in today’s session, the Hang Seng has been the standout regional market over the course of the week.
Financials are dragging the Hong Kong index higher, while internet giant Tencent Holdings is also pushing towards its record high of $HK288.40:
Among other Asian markets, South Korea’s KOSPI Index is up more than 1% while a short time ago the BSE Sensex in India was 0.7% higher. Not to be left out, the ASX200 has posted strong gains across the board and is on track to finish more than 1% higher.
Japan’s Nikkei is trading flat, after the Japanese yen strengthened against the US dollar overnight.
The Nikkei is generally sensitive to movements in the yen, and typically falls when the yen rises strongly due to the higher weighting of big export companies on the Japanese stock market.
It’s been a good year for most Asian stock indexes. As David Scutt pointed out on Tuesday, foreign capital has been piling into the emerging markets across Asia in the first half of 2017.
The Indian market was the largest recipient of foreign capital, with investment in South Korea also rising.
Not surprisingly, both India’s BSE Sensex Index and South Koreas’s KOSPI have pushed to new record highs this year, recording 2017 gains of 21.5% and 19.5% respectively.