Asian stocks mostly higher with Chinese markets closed for holiday

Most Asian equity markets closed higher on Thursday, driven by strong gains in Japanese stocks.

The yen was broadly flat against the euro but climbed 0.45% and 0.26% against the pound and the dollar respectively.

With markets in China and Hong Kong closed until next week for a national holiday, Japan’s Nikkei climbed 0.48% to 18,182.39, buoyed by solid gains on Wall Street in the previous session.

The Dow Jones closed 1.8% on Wednesday, after data released earlier in the session showed the US private sector job had expanded at a modest pace in August, while a Federal Reserve report indicated workers’ pay had started to increase.

“China has been the single biggest source of uncertainty in the financial markets in the past few weeks, and for the next two trading sessions that uncertainty has been removed,” said IG’s market analyst David Madden.

“Any buying these days tends to be short-lived, and as China isn’t out of the woods yet it will be a true test of confidence to see how long the gains are held.”

On Friday, investors on both sides of the Pacific will closely monitor a report on the US job market, which could provide vital clues over the timing of the first hike in interest rates by the Federal Reserve.

A September rate hike, which was considered almost certain until a couple of weeks ago, now looks increasingly unlikely following the sell-off sparked by the slowdown in the Chinese economy in August.

“The slowdown of the Chinese economy, the devaluation of the yuan against the U.S. dollar, and the world-wide decline in commodity prices could further delay the return of US inflation to its 2% target,” analysts at Rabobank said in a note.

“This makes a September rate hike by the Fed decreasingly likely.”

Elsewhere in Asia, South Korea’s Kospi edged 0.02% higher to 1,915.53, while Malaysia’s main index rose 0.8% to 1,602.75, as the country’s ringgit extended its losses against the dollar, losing another 0.6% to 4.2430 after hitting a 17-year low last week.

Meanwhile, Singapore’s FTSE Straits Times Index rose 0.98% to 2,907.36, while Australia’s ASX fell 1.4% to 5,027.80.