Asian Shares Surge after US S&P 500 Hits New High for 2023

Asian shares mostly gained on Wednesday as investors looked ahead to China’s May trade data, geopolitical developments, and signs of more widespread momentum in US markets.

At 9.42 a.m. Bangkok time, the S&P/ASX 200 in Australia rose by 0.10%, as the country’s GDP increased by only 2.3% in the first quarter. This was the weakest rate of growth in over a year and a half.

The rally in Japanese stocks appears to have stalled, as the Nikkei 225 index fell 1.44%, leading loss in the region.

After a holiday, the South Korean stock market got off to a good start, with the Kospi up 0.29%.

Hong Kong’s Hang Seng index added 1.15%, while the Shanghai Composite in mainland China gained 0.39%.

Overnight in the US, the S&P 500 and the Nasdaq Composite climbed to their highest close since the start of 2023, as Wall Street weighed a recent rally that pushed the broad index to its biggest gain in nine months. 

Traders are hopeful for stimulus after officials in China ordered the country’s largest banks to reduce deposit rates, despite this action is unlikely to significantly boost the country’s slowing economy. According to Bloomberg Economics, the People’s Bank of China will likely reduce its one-year benchmark interest rate “as soon as mid-June.”

The World Bank reported on Tuesday that the global economy is in an uncertain situation because of the impact that significant interest rate hikes have had on activity and on the vulnerabilities of countries with lower per capita incomes. 

The markets anticipate the Federal Reserve will keep rates unchanged at its June meeting despite persistently strong US inflation, leaving the door open to future rate hikes.