- Asian stocks track US equities higher on Tuesday.
- Upbeat US manufacturing data and dovish Fed expectations power gains.
Asian stocks ticked higher on Tuesday as strong US manufacturing data boosted confidence, helping investors shrug off coronavirus-induced uncertainty.
Japan’s Nikkei index rallied by over 1% and stocks in Australia rose 1.6%. South Korean shares also jumped 1.13% alongside a 0.7% gain in Hong Kong’s Hang Seng index. The MSCI’s broadest index of Asia-Pacific shares outside Japan added nearly 0.9%.
Meanwhile, gold is sidelined near $1,976 per ounce amid lackluster action in the forex markets.
The US ISM Manufacturing released on Monday showed the activity expanded in July at the fastest pace in more than a year. The data put a bid under the US stocks, lifting the Dow Jones Industrial Average by 0.89%.
Additional bullish pressure may have stemmed from reports stating that the US Federal Reserve may ditch its long-followed strategy of preemptively raising rates to avoid a buildup of inflationary pressures. In other words, the Fed may become more tolerant of above-target inflation and keep the monetary policy easy for a prolonged period of time.
And while the US data and dovish Fed expectations are currently powering gains in stocks, the risk sentiment remains vulnerable to a resurgence of the coronavirus and flare-up in Sino-US tensions. The US President Trump has threatened to ban social media app TikTok unless its operators are sold off from the Chinese company called ByteDance, according to Reuters.
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