Asian stock markets advanced Wednesday as sentiment was buoyed after the Dow Jones Industrial Average posted a new record high Tuesday on the back of a bullish service sector data.
Japan's benchmark Nikkei surged 2.13 percent or 248.82 points to 11,932.27, and Hong Kong's Hang Seng gained 0.88 percent or 197.71 points to 22,758.21. The Chinese Shanghai Composite advanced 0.93 percent or 21.64 points to 2,347.94, while South Korean KOSPI Composite gained 0.20 percent and India's BSE Sensex rose 0.72 percent.
Markets opened on a strong note, following the gains from the Wall Street. The Dow Jones Industrial Average stock index jumped 0.89 percent to hit all time high of 14,253.77, helped by a strong U.S. service sector report. Data released by the Institute for Supply Management showed that the U.S. services industry expanded at the fastest pace in a year in February as new orders and demand for exports accelerated.
The ISM non-manufacturing index, which rates the relative level of business conditions, including employment, production, new orders, prices, supplier deliveries and inventories, rose to 56 in February from 55.2 in January and surpassed Reuters' estimate of a slight decline to 55. The strong services data along with recent better-than-expected reports on factory activity, consumer sentiment and spending and a recovery in the nation's housing market, suggest that the strength of the economic recovery in the world's largest economy is gaining traction.
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Meanwhile, hopes that all the central banks will stick to an extremely lax monetary policy at their meetings this week also added to the sentiment and offset concerns over the effects from the U.S. spending cuts that came into effect Friday and the political deadlock in Italy. The European Central Bank, the Bank of England and the Bank of Japan all hold their policy meetings on Thursday.
"That's fantastic testament to the power of easy money, in the face of doubts about the U.S. economy now that fiscal spending is being cut back. Not to mention the power of easy money to overcome political uncertainty in Italy and recession throughout Europe," Kit Juckes, strategist at Societe Generale, told Reuters.
The Japanese Nikkei surged, led by gains from financial and technology companies’ shares. Nomura Holdings Inc. gained 1.44 percent and Sumitomo Mitsui Trust Holdings Inc. advanced 2.05 percent while Pioneer Corp. climbed 5.82 percent.
In Hong Kong, Agricultural Bank of China Ltd. surged 3.08 percent and Standard Chartered Plc gained 1.71 percent while Jiangxi Copper Co Ltd. rose 3.43 percent.
In Seoul, Samsung Electronics Co Ltd. gained 0.57 percent and SK Hynix surged 4.07 percent while Hyundai Motor Co. declined 2.26 percent.