SYDNEY: Asian shares tracked Wall Street higher on Thursday (Apr 23), led by record highs in Japan, South Korea and Taiwan, as investors shrugged off higher oil prices from more shipping woes in the Gulf and focused on strong corporate earnings.
Overnight, the S&P 500 climbed 1 per cent and the Nasdaq jumped 1.6 per cent to close at new record highs, helped by a strong start to an earnings season that has eased concerns about the health of the US consumer despite rising energy prices from the Iran war.
That was despite oil prices gaining for a fourth straight day. Iran on Wednesday captured two container ships seeking to exit the Gulf via the Strait of Hormuz, tightening its grip on the crucial waterway, as a fragile ceasefire hangs in the balance for now.
Brent crude futures rose 0.5 per cent to US$102.45 a barrel, having jumped 3.5 per cent overnight to cross back above US$100.
MSCI’s broadest index of Asia-Pacific shares outside Japan rallied 1 per cent to a record high as tech heavyweights surged in the region.
Markets in Japan, South Korea and Taiwan vaulted to records for a second day, with the Nikkei topping the 60,000 mark.
China’s blue chips rose 0.3 per cent and Hong Kong’s Hang Seng index slipped 0.3 per cent.
“Markets have been remarkably effective at looking through risks – and may continue to be. But the list of risks is growing as resolutions remain elusive,” said Laura Cooper, global investment strategist at asset manager Nuveen.
“The dissonance cannot hold indefinitely … At some point, the weight of what is being ignored could become the only one that matters.”
Wall Street futures slipped in Asia after the earnings-driven rally, with the Nasdaq futures off 0.2 per cent and S&P 500 futures down 0.3 per cent.
Shares of GE Vernova surged 13.75 per cent after the power equipment maker raised its annual revenue forecast on the AI boom, and Boeing advanced over 5 per cent after a smaller-than-expected quarterly loss.
Electric automaker Tesla reported a surprise positive free cash flow in the first quarter, but its projection of sharply higher spending plans on AI and robotics drew scepticism from investors, with its shares last down 2 per cent after the bell.
Treasuries were also mostly steady despite the jump in oil prices.
The two-year U.S. Treasury yield held at 3.8064 per cent, after edging up 1 basis point (bp) on Wednesday.
The 10-year yield inched 1 bp higher at 4.3094 per cent, after finishing little changed overnight.
Currencies were mostly calm, with the dollar holding onto small gains from overnight. The euro was steady at US$1.1709, just above a 10-day low of US$1.1691, having lost 0.3 per cent overnight.
“It is questionable whether financial markets are correctly pricing the reality that supply constraints will remain an issue for some time,” said Skye Masters, head of markets research at the National Australia Bank.