Asian stocks staged an epic rally today

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Asian stocks, propelled higher by chatter that China may be about to loosen its fiscal taps, enjoyed one of the best sessions in years on Wednesday with all major indices posting gains of more than 1%.

The Nikkei was by far the stand out performer, adding a jaw-dropping 7.71%. Helped by weakness in the yen and likely short covering following a near 20% fall in recent weeks, it recorded its largest one-day percentage increase since October 29, 2008.

The chart below reveals that it was the eighth-largest percentage increase in the past half century – truly amazing stuff.

While not to the same degree as Japanese stocks, markets in Australia, South Korea, Taiwan and Singapore all rose between 1.08% to 3.57%.

In late trade Hong Kong’s Hang Seng sits up more than 3%.

Chinese stocks, the source of the sudden turnaround investor confidence – not only today but overnight – enjoyed another impressive session. At the close the benchmark Shanghai Composite rose to 3,243.09 points, an increase of 2.3%. In what is a familiar pattern, at least in recent days, small cap stocks outperformed their larger peers with the Shenzhen Composite, CSI 500 and ChiNext indices all closing up around 3%.

On Tuesday evening China’s ministry of finance announced it intended to implement a stronger and proactive fiscal policy in order to address a slowdown in the economy. While the details were vague, it was cited by some market watchers as the catalyst that sparked the renewed rally in Chinese stocks.

Whether that’s actually the reason, particularly given rallies of late have been orchestrated by the government’s “national team”, is debatable.

Stocks aside, risk assets across the regional also enjoyed a stellar session. The Australian and New Zealand dollars rose by more than 0.5% against the US dollar and even more against the Japanese yen. Reflective of its stance as a global funding currency, the euro fell 0.26%, presumably on the back of selling to finance renewed carry trades in risk assets.

The full Asia scoreboard can be found below.

Stocks

  • ASX 200 5221.10 , 105.85 , 2.07%
  • Nikkei 225 18770.51 , 1343.43 , 7.71%
  • Shanghai Composite 3243.92 , 73.47 , 2.32%
  • Hang Seng 22006.39 , 747.35 , 3.52%
  • KOSPI 1934.20 , 55.52 , 2.96%
  • Straits Times 2922.61 , 37.29 , 1.29%
  • S&P 500 Futures 1986.25 , 20.50 , 1.04%

Forex

  • USD/JPY 120.53 , 0.75 , 0.63%
  • USD/CNY 6.3747 , 0.0090 , 0.14%
  • AUD/USD 0.7044 , 0.0030 , 0.43%
  • NZD/USD 0.6369 , 0.0027 , 0.43%
  • AUD/JPY 84.88 , 0.87 , 1.04%
  • EUR/USD 1.1175 , -0.0024 , -0.21%
  • GBP/USD 1.5385 , -0.0010 , -0.06%
  • USD INDEX 96.172 , 0.1870 , 0.19%

Commodities

  • Gold $1,121.45 , $0.05 , 0.00%
  • Silver $14.71 , -$0.11 , -0.71%
  • WTI Futures $45.80 , -$0.14 , -0.30%
  • Copper Futures $2.462 , $0.02 0.96%
  • Iron Ore Futures ¥398.00 , ¥15.00 , 3.92%

10-Year Bond Yields

  • Australia 2.763%
  • New Zealand 3.355%
  • Japan 0.358%
  • Germany 0.706%
  • UK 1.886%
  • US 2.222%

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