A powerful wave of defiance is sweeping across Asian markets on Wednesday, with stocks rising in a stunning break from a wounded Wall Street.
Instead of succumbing to the fear of a renewed and bitter trade feud between the United States and China, the region is charting its own bullish course, a rally built on the increasingly firm conviction that a dovish Federal Reserve will soon come to the rescue.
The buying is broad-based and decisive. Japan’s benchmark Nikkei 225 index has risen 0.98 percent, South Korea’s Kospi has jumped 0.8 percent, and Australia’s ASX/S&P 200 is up 0.93 percent.
This powerful and coordinated rally is a direct and forceful rebuttal to the chaos that has once again been unleashed by Washington.
A war of words, a market unmoved
The latest chapter in the long-running US-China trade saga was ignited on Tuesday, when President Donald Trump once again took aim at Beijing for not buying American soybeans, calling it an “an economically hostile act” and threatening fresh “retribution.”
The renewed war of words sent Wall Street on a wild and volatile ride, with the S&P 500 swinging from a 1.5 percent loss to a 0.4 percent gain before finally closing in the red.
“Volatility remains elevated, and the best explanation is the strained relationship between the U.S. and China,” veteran investor Louis Navellier wrote in a note.
But as a new day dawns in the East, that volatility has been replaced by a strange and resilient calm. Asian investors are choosing to focus not on the threats of today, but on the promise of tomorrow.
A deflationary chill, a dovish hope
This bullish sentiment is so powerful that it is even managing to overshadow a fresh dose of worrying economic data from China.
The country’s consumer prices fell by 0.3 percent in September, a sharper decline than economists had been expecting and a clear sign that deflationary pressures continue to haunt the world’s second-largest economy.
But for now, the market is choosing to look past the deflationary chill and is instead focusing on the prospect of a powerful monetary tailwind.
The latest signal came from Federal Reserve Chair Jerome Powell, who on Tuesday suggested the central bank is nearing a point where it will stop reducing the size of its massive bond holdings, a comment that has been interpreted as a clear hint that more interest rate cuts are on the way.
A bullish wave hits Dalal Street
This powerful global tailwind is set to provide a strong lift to the Indian market. After closing in the red on Tuesday, the Sensex and Nifty 50 are poised for a higher open, with the trends on the Gift Nifty indicating a positive start for Dalal Street.
The Gift Nifty was trading around the 25,287 level, a premium of nearly 81 points, a clear sign that the bulls are preparing to retake control as the market looks to join the defiant global rally.
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