Asian stock markets were mostly higher on Monday, as investors welcomed the positive signs of Japan’s economic recovery and the US government’s avoidance of a shutdown. Markets in China and South Korea were closed for holidays, while oil prices rose and US futures also gained.
Japan’s Tankan Survey Shows Rising Optimism Among Businesses
One of the main drivers of the market sentiment was the release of the Bank of Japan’s quarterly Tankan survey, which measures the business confidence of large manufacturers and non-manufacturers. The survey showed that the sentiment among major manufacturers improved to plus 9 in September, up from plus 5 in June, while the sentiment among major non-manufacturers rose to plus 27, the highest level in about three decades. The survey also indicated that the businesses expect the economic conditions to improve further in the next quarter, despite the challenges posed by the COVID-19 pandemic and the supply chain disruptions.
The Tankan survey is considered a key indicator of Japan’s economic health and the outlook for monetary policy. The positive results boosted the Nikkei 225 index, which rose 0.7% to 32,098.40, its highest close since August 16.
US Congress Passes Stopgap Funding Bill to Prevent Shutdown
Another factor that lifted the market mood was the news that the US Congress passed a stopgap funding bill on Saturday, which will keep the federal government running until November 17. The bill averted a potential shutdown that could have disrupted the government services and the economic recovery. The bill also included $28.6 billion in disaster relief and $6.3 billion in Afghan refugee assistance.
The passage of the bill eased some of the political uncertainty that has been weighing on the markets, as the US lawmakers still face the challenges of raising the debt ceiling and passing the infrastructure and social spending bills. The US futures were higher on Monday, with the Dow Jones Industrial Average futures up 0.4%, the S&P 500 futures up 0.3%, and the Nasdaq 100 futures up 0.2%.
Other Asian Markets Also Gain, Oil Prices Rise
In other Asian markets, Taiwan’s Taiex index rose 1.2%, as the technology sector led the gains. The index was also supported by the easing of COVID-19 restrictions and the resumption of international flights. In Australia, the S&P/ASX 200 index edged down 0.2%, as the energy and mining sectors declined. The index was also affected by the lockdowns in some states and the rising COVID-19 cases. In Thailand, the SET index was slightly lower, as the tourism and consumer sectors were under pressure from the pandemic.
Meanwhile, oil prices rose on Monday, as the global demand outlook improved and the supply remained tight. Brent crude, the international benchmark, rose 1.1% to $79.32 a barrel, while West Texas Intermediate, the US benchmark, rose 1.2% to $75.65 a barrel. Both benchmarks reached their highest levels since October 2018.