Asian shares saw significant advances on Wednesday, following U.S. stocks' approach toward near-record levels, although U.S. futures displayed modest declines. South Korea’s Kospi index emerged as the region's leader, surging by 2.4% to reach 2,763.32, buoyed by the election of liberal opposition candidate Lee Jae-myung as president.
Lee’s election concludes a period of political instability in South Korea, marked by the abrupt imposition of martial law under the previous conservative administration of Yoon Suk Yeol. The incoming president's primary concerns are expected to encompass government expenditure and trade dialogues with the United States. According to Min Joo Kang from ING Economics, bolstering economic growth will be a central challenge, especially given that the economy contracted by 0.2% in the first quarter of 2025, before the impact of President Trump's tariffs on exports.
In Japan, the Nikkei 225 index rose by 1%, driven by gains in technology and pharmaceutical sectors. Notably, shares of Toyota Motor Corp. increased by 2% following the announcement of a $33 billion acquisition of Toyota Industries Corp., a manufacturer of auto parts and lift trucks, resulting in a 12.5% decline in Toyota Industries' shares.
Meanwhile, Chinese stock indices showed modest gains, with Hong Kong’s Hang Seng index climbing 0.6% to close at 23,650.12, while the Shanghai Composite index advanced 0.3% to 3,372.85. Taiwan’s Taiex also rose, increasing by 2.1%.
Market participants remained alert for updates regarding President Donald Trump's tariffs, particularly the enforcement of 50% tariffs on steel and aluminum imports, set to commence on Wednesday. As industries are lobbying for expanded protectionism to include downstream products, analysts predict that prices of numerous essential goods are likely to rise.
On the preceding Tuesday, the S&P 500 index registered a 0.6% increase, positioning it within less than 3% of its historical high of 5,970.37, achieved earlier this year. The Dow Jones Industrial Average climbed 0.5%, closing at 42,519.64, while the Nasdaq composite saw a 0.8% rise to 19,398.96. One notable market mover was Dollar General, whose shares soared by 15.8% after surpassing analysts' expectations for the first quarter's profit and revenue.
Amid uncertainties regarding future financial forecasts due to fluctuating tariffs initiated by Trump, the Organization for Economic Cooperation and Development projected a 1.6% growth in the U.S. economy for the current year, contrasting with the 2.8% growth reported in the previous year.
A report released Tuesday revealed that U.S. employers posted more job openings than anticipated at the end of April, reflecting a resilient labor market. This data precedes an important upcoming report due on Friday, which is expected to outline hiring and firing statistics for U.S. employers during May.
On the trade front, optimism persists among Wall Street investors regarding potential trade agreements with other nations that could ultimately lower tariffs, especially with China, the world's second-largest economy. Reports indicated that President Trump is expected to communicate with Chinese leader Xi Jinping this week, although a spokesperson from the Chinese foreign ministry noted no information regarding this dialogue was available.
Tech stocks were again at the forefront of market movements, with Nvidia's shares increasing by 2.9% and Broadcom's growing by 3.3%. These chipmakers have managed to recover from significant losses earlier this year, a period characterized by concerns over inflated stock valuations.
In the broader bond market, Treasury yields remained stable following encouraging employment data from the U.S. This stability comes after an uptick in yields over the preceding two months, partially due to apprehensions about the projected increase in U.S. government debt as a result of tax reductions.
In early Wednesday dealings, U.S. benchmark crude oil fell by 19 cents to $63.22 per barrel, while Brent crude, the international benchmark, dropped by 16 cents, settling at $65.47 per barrel. The U.S. dollar noted a decline against the Japanese yen, falling to 143.86 from 144.00, while the euro experienced an uptick, rising to $1.1383 from $1.1370.
