Asia stocks rally after Turkey rate hike; Nikkei ends up 2.7%

Investing.com - Asian stock markets rallied on Wednesday, as market sentiment improved after Turkey’s central bank announced aggressive rate hikes overnight in an effort to stem the lira’s decline.

The move eased concerns over emerging markets, following a broad based selloff last Friday, triggered by worries over the impact of reduction in Fed stimulus and concerns over a possible slowdown in China.

During late Asian trade, Hong Kong's Hang Seng Index jumped 1%, China’s Shanghai Composite index added 0.55%, Australia’s ASX/200 Index closed 1.04% higher, while Japan’s Nikkei 225 Index ended up 2.7%.

Traders turned their attention to the Federal Reserve’s policy statement later in the session, amid expectations for a further reduction in stimulus. The policy meeting will mark the last for outgoing Fed Chairman Ben Bernanke, as current Vice Chair Janet Yellen prepares to take over.

In Tokyo, the Nikkei rose by the most in five months as the yen weakened against the U.S. dollar, buoying sentiment.

USD/JPY rose to a session high of 103.35, moving away from a seven-week low of 101.75 hit earlier in the week. A weaker yen increases the value of overseas income at Japanese companies when repatriated, boosting the outlook for export earnings.

Automakers Toyota and Mazda saw shares rise 2% and 3% respectively, Sharp surged 7.9%, while index heavyweights Fast Retailing and Fanuc advanced 3.2% and 3.3%.

Japanese megabanks were also lower with shares of the nation’s largest lender Mitsubishi UFJ Financial Group climbing 2.7%, while Sumitomo Mitsui Financial Group and Nomura Holdings rose 2.7% and 2.95% respectively.

Elsewhere, in Hong Kong, the Hang Seng rallied as investors continued to monitor liquidity conditions in the financial system.

China Construction Bank shares jumped 3.3%, Industrial and Commercial Bank of China rose 4.1%, while China Minsheng Bank and China Citic Bank gained 3.6% and 2.1% respectively.

Index heavyweights Lenovo and Tencent rallied 5.7% and 5.3% respectively.

Shanghai and Hong Kong markets will be shut from January 30 and will resume trade on February 5 due to the Lunar New Year holiday.

Meanwhile, in Australia, the ASX/200 Index rebounded from the previous session’s five-week low as gains in the financial and mining sectors boosted the benchmark index.

Commonwealth Banking Group advanced 1.1%, while Australia and New Zealand Banking and National Australia Bank rose 0.8% apiece, while Westpac Banking added 1.35%.

Mining heavyweights BHP Billiton and Rio Tinto climbed 1.5% and 2.3%, while Fortescue Metals Group and Atlas Iron rose 2.9% and 10% respectively.

Looking ahead, European stock market futures pointed to a higher open. The EURO STOXX 50 futures pointed to a gain of 0.7% at the open, France’s CAC 40 futures rose 0.7%, London’s FTSE 100 futures indicated a gain of 0.6%, while Germany's DAX futures advanced 0.9%.

Across the Atlantic, U.S. equity markets also pointed to a higher open. The Dow Jones Industrial Average futures pointed to a gain of 0.45%, S&P 500 futures inched up 0.5%, while the Nasdaq 100 futures indicated a rise of 0.7%.