Japan and Australia stocks rise, tech rebound lifts U.S. equities.

Japanese and Australian Stock Markets Rise, Nikkei 225 Surpasses 39,400 Points

On Wednesday (January 31), both the Japanese and Australian stock markets rose, driven by a strong overnight rebound in U.S. stocks. Meanwhile, some Asia-Pacific markets remained closed for the Lunar New Year holiday, resulting in relatively low regional trading volume.

• In the Japanese stock market, the Nikkei 225 Index rose 1.02% to close at 39,414.78 points, breaking recent highs.
• The TOPIX also increased 0.68%, ending at 2,775.59 points.
• Key stocks largely advanced, with Sony rising 3.8% to a record high, Renesas Electronics surging nearly 6%, ADVANTEST up 4.4%, SoftBank Group gaining 2.4%, and Tokyo Electron increasing by 2.3%.

The Australian stock market also moved higher, with the S&P/ASX 200 Index up 0.57% to close at 8,447 points, marking its highest level since December 5 of last year. Investor optimism was bolstered by inflation data coming in lower than expected, with a more moderate outlook on policy from the Reserve Bank of Australia.

Bank of Japan Releases Meeting Minutes, Market Watches Interest Rate Policy

On Wednesday, the Bank of Japan released the minutes from its December 2023 meeting, revealing in-depth discussions among policymakers about the neutral interest rate level. With inflation still above the 2% target and labor shortages pushing up wages, the Bank of Japan is considering how to adjust borrowing costs.

Last week, the Bank of Japan raised the benchmark interest rate by 25 basis points to 0.5%, the highest level since 2008. The market anticipates that the Bank may continue adjusting its monetary policy in the coming months to address the balance between inflation pressure and economic growth.

Australian Inflation Data Below Expectations, Market Bets on Moderate Policy

Australia's latest inflation data showed a 0.2% quarter-on-quarter increase in the fourth quarter of 2023, with an annual rate of 2.4%, below economists' forecast of 2.5%.

This data indicates that although price levels are still rising, inflationary pressure has eased. The market believes that the Reserve Bank of Australia (RBA) may not rush to further raise interest rates. The easing of inflation has boosted market risk appetite, driving stock markets higher.

US Stocks Strongly Rebound Overnight, Tech Stocks Revive Market

Overnight, major U.S. stock indexes rebounded across the board, with the strong performance of tech stocks lifting market sentiment.

• The S&P 500 rose 0.92%, closing at 6,067.70 points.
• The Nasdaq Composite Index surged 2.03% to 19,733.59 points, recovering from the previous session's 3.1% loss.
• The Dow Jones Industrial Average increased by 136.77 points, or 0.31%, to end at 44,850.35 points.

This rebound was mainly driven by a resurgence in tech stocks. The Technology Select Sector SPDR Fund (XLK) rose over 2%, reversing the nearly 4.9% drop from Monday.

NVIDIA Spurs Big Rebound, Market Focuses on Tech Stocks

Market attention focused on NVIDIA, which rose nearly 9% in overnight trading. Previously, NVIDIA plunged by 17% due to market concerns, evaporating nearly 600 billion USD in market value in a single day, setting a record for the largest single-day market value drop in U.S. stock history.

Besides NVIDIA, Broadcom and Oracle rose by 2.6% and 3.6% respectively on Tuesday, recovering part of the previous session's losses.

The market believes that although tech stocks still face valuation pressures and macroeconomic uncertainties, in the short term, capital may re-enter the sector after being oversold. Investors are closely watching the upcoming earnings reports from major tech companies to determine if the market can sustain its rebound momentum.

Market Outlook: Short-Term Stock Market Trends Influenced by Policy and Corporate Earnings

Currently, the market's focus remains on global central bank policy adjustments and the upcoming corporate earnings reports.

Will the Bank of Japan Raise Rates Further?:

If inflation pressure continues, the Bank of Japan may further adjust monetary policy in the next few months, impacting the performance of Japanese stocks.

Australian Economic Data and Central Bank Policy:

If inflation continues to slow, the Australian central bank may delay rate hikes, potentially supporting the stock market.

Can Tech Stocks Maintain Their Rebound?:

After their previous adjustments, U.S. tech stocks are seeing short-term recovery. The market is awaiting more corporate earnings reports to assess whether tech stocks have a basis for continued increases.

Federal Reserve Policy Outlook:

The next steps of the Federal Reserve remain uncertain. If rate policies turn more dovish, they could support global stock markets.

Overall, market sentiment is gradually warming, but short-term volatility risks remain. In the coming days, investors will closely watch global economic data and changes in central bank policies to determine the future direction of stock markets.

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.