The Asian indices showed mixed signals as global market optimism prevailed. While the S&P 500 reached a new record high, Asian markets responded positively, with notable gains across several indices.
The Nikkei 225 surged by 1.65%, supported by expectations that the Bank of Japan (BoJ) will maintain its current policy settings during the upcoming meeting on October 31. Analysts anticipate a further weakening of the yen, which could provide additional support for the index. Despite concerns about weak household spending data, the Nikkei has maintained an upward trend, with technical indicators suggesting potential targets in the near term. Investors may adopt a buy-on-dips strategy, particularly if the index retraces towards its 200-day moving average.
The Hang Seng Index continues to face challenges as investors await clarity on fiscal stimulus measures from Chinese authorities. The lack of definitive policy commitments has led to a cautious approach among investors, resulting in a pause following the early-October sell-off. It is expected that significant policy announcements will be delayed until after the US elections, as the outcome will play a crucial role in shaping future trade relations with China. In the meantime, the Hang Seng Index is expected to consolidate within a specific range, with economic data yet to demonstrate the effectiveness of recent policy boosts.
The Straits Times Index (STI) is demonstrating resilience as expectations of Federal Reserve rate cuts loom on the horizon. The dividend yield from the index's constituents, particularly heavyweight banks and real estate investment trusts (REITs), continues to attract investor interest. Recent price retracements have been limited, indicating strong buying support, while technical conditions are moderating to more neutral levels, providing a potential reset for the market. Policymakers are also focused on enhancing Singapore's appeal for company listings, which could further bolster market activity. While clarity on this front is still awaited, an increase in quality listings and improved market liquidity may help companies realize their value and attract international investors. The STI's recent gap up suggests that buyers are eyeing a retest of the September high, with any breakout potentially paving the way toward the record high. Investors will be watching closely for signs of a higher low formation, as the broader trend remains upward.