Asian stocks experienced a notable rise on Friday, setting the stage for strong gains in June. Investors held onto hopes that the Federal Reserve might cut interest rates this year due to a cooling U.S. economy. However, Chinese shares did not perform as well as their regional counterparts this month. Concerns over a potential trade war with the West and doubts about the country’s economic recovery led to significant losses in local markets.
Asian stocks were largely unaffected by a lacklustre overnight close on Wall Street. Investors remained cautious ahead of key inflation data expected later on Friday, which could influence the outlook for interest rates. U.S. stock index futures saw a slight rise during Asian trading, as weak economic readings throughout the week fuelled speculation about a slowing economy. Attention was focused on the upcoming PCE price index data, the Federal Reserve’s preferred inflation gauge.
Japanese stocks experienced gains following mixed inflation readings. Both the Nikkei 225 and TOPIX indices rose by about 0.8%, with the latter reaching a three-month high. While the headline CPI indicated an increase, underlying inflation remained weak and close to levels last seen in late 2022. Tokyo’s inflation data, often a predictor for national inflation, showed minimal signs of growth. The Nikkei and TOPIX were set to gain 3.2% and 1.6% respectively in June, recovering from a mediocre performance for most of the second quarter.
The broader Asian markets advanced, setting the stage for gains in June. Australia’s ASX 200 rose by 0.4%, rebounding from two consecutive sessions of losses. The index increased by 1.3% this month.
South Korea’s KOSPI saw a rise of 0.2%, with a 5.9% increase in June. This gain was primarily driven by investments in local chipmaking stocks, fuelled by the growing interest in artificial intelligence. Major beneficiaries of this trend were memory chip makers SK Hynix Inc and Samsung Electronics Co Ltd. Meanwhile, India’s Nifty 50 index was up nearly 7% in June, hitting a series of record highs due to sustained confidence in the Indian economy. Local stocks remained resilient despite the unexpected results of the 2024 general elections, where the ruling BJP party secured a smaller majority.
In contrast, Chinese stocks lagged behind for June. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose by about 0.8% on Friday but were both set to lose around 3% for the month. Hong Kong’s Hang Seng index added 0.6%, trading up over 1% in June. Chinese markets struggled this month, as fears of a potential trade war with the West negatively impacted sentiment towards China. Beijing hinted at possible retaliatory measures in response to European tariffs on Chinese electric vehicle imports. Additionally, optimism over potential stimulus measures from Beijing waned in June, following a series of mixed economic readings from the country.
Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.
