In Singapore, Hong Kong shares surged to their highest levels in three years on Tuesday, leading the way for other Asian markets to climb. Investors are feeling optimistic about the prospects of the world's second-largest economy, buoyed by recent data and promises of continued support for consumer spending.
The Hang Seng index saw a 2% increase in morning trading, marking a substantial 23% gain for the year - the largest among major markets. Traders covering their short positions on the New Zealand dollar, which is closely linked to Chinese consumer demand through food exports, pushed it to a three-month peak of $0.5827.
The Australian dollar, which is influenced by China, reached a one-month peak just below $0.64, while China's yuan held steady near its highest levels so far this year. Despite the OECD's prediction that President Trump's tariff hikes could hinder economic growth in North America, China seems to have benefitted from the uncertainty, attracting foreign investors worried about a U.S. slowdown.
Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore, noted a shift in momentum and sentiment towards a positive direction. China's recent announcement of childcare subsidies and initiatives to boost domestic consumption, coupled with a rise in retail sales growth, have bolstered confidence. The possibility of a visit by Chinese President Xi Jinping to the U.S. has raised hopes of a potential breakthrough in trade talks and a reduction in tariffs.
Market indicators in Hong Kong continue to show strength, with the Hong Kong dollar trading at the upper end of its range against the greenback and interbank rates easing, indicating a surge in capital inflows. While mainland Chinese shares saw more moderate gains, the broader Asia-Pacific stock index increased by 1%, with markets in Seoul, Sydney, and Taipei also experiencing upticks.
The Nikkei index in Japan rose by 1.5%, heading towards its most significant increase in three weeks. Wall Street stabilized overnight, but apprehensions linger as April approaches, bringing with it the implementation of Trump's proposed retaliatory tariffs.
With weaker retail sales and factory activity data in the U.S., pressure on the dollar and yields persisted, fueling gains for gold - reaching a record high of $3,005 per ounce in Asian markets. The euro remained strong above $1.09, while the British pound traded just below $1.30 after hitting a four-month high.