Most Asian bourses rallied on Thursday, with Chinese stocks the region's best performer based on optimism over the mainland's reopening and encouraging US jobs data, while investors shrugged off the Federal Reserve's warning about interest rate hikes.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1% to touch a four-month high in morning trade. Hong Kong's Hang Seng Index also jumped 0.9% amid speculation over an imminent border reopening with the mainland.
The Shanghai Shenzhen CSI 300 and Shanghai Composite indices rallied by 1.8% and 1.3%, respectively.
The Stock Exchange of Thailand (SET) closed lower on Thursday on profit-taking, following market consolidation on Wednesday. A strong baht and solid GDP outlook in the coming quarters bode well for foreign inflows and limit the market downside, analysts said.
Asia's optimism tracked gains on Wall Street overnight despite a slightly hawkish tone from the US as the minutes of the Fed's December meeting showed that policymakers want to keep interest rates higher for longer. Such guidance puts pressure on regional stocks in the long term.
"The minutes indicated interest rates would remain elevated for some time and no Fed member sees an interest rate cut in 2023," Rakpong Chaisuparakul, an analyst at KGI Securities, said in a research note on Thursday.
Broad Asian gains were tallied after China announced an end to its zero-Covid curbs on travel and activity, as the nation struggles to cope with high infection rates. The relaxation is expected to not only boost tourism and consumption, but also ease some of the supply chain crunches experienced during 2022, analysts said.
Sentiment was also lifted by strong jobs numbers in the US, but this could stoke inflationary pressures and support further interest rate hikes, said analysts.
The baht rose to a nine-month high on Thursday, ranking among the top gainers in Asian foreign exchange. The Thai currency was quoted at 34.06 baht per dollar, the strongest appreciation since April 25, on the back of rising tourist arrivals, partially attributed to China's reopening.
Export and tourism stocks will benefit from the baht's sharp appreciation, said Poon Panichpibool, a markets strategist at Krungthai Bank, adding that investors were starting to opt for risky assets, guessing the Fed might slow rate increases on concerns the overall economy could dip.
The dollar weakened slightly, supporting gold prices that have hovered around US$1,860 per ounce. Analysts see gold prices continuing to rise to near $1,870 in the first week of 2023.
Daol Securities said the baht appreciated 11% from a floor of 38.55 baht against the greenback in late October.
The brokerage said stocks poised to gain from the appreciation that can best the SET Index include Asia Aviation (AAV), B.Grimm Power (BGRIM), Thai Oil (TOP) and Synex (Thailand) (SYNEX).