Asian markets started the week positively ahead of key central bank policy meetings in the United States and Japan, following a strong rally on Wall Street after a turbulent week. U.S. futures and oil prices also saw an increase. In Tokyo, the Nikkei 225 index surged by 2.1% to 38,468.63.
This week’s main focus for Asian markets is the Bank of Japan’s monetary policy meeting on Wednesday, with expectations that the central bank will raise its key interest rate from near-zero to possibly 0.3%. Meanwhile, the U.S. Federal Reserve is anticipated to keep its benchmark rate unchanged after its policy meeting on Wednesday, potentially hinting at a rate cut in September. Additionally, U.S. jobs data is expected on Friday.
Stephen Innes of SPI Asset Management commented on the market’s anticipation of volatility, noting that the premature expectation of rate cuts since the Federal Reserve began raising rates in March 2022 has been a significant market error. The Japanese yen weakened against the U.S. dollar, trading at 153.35 yen early Monday, down from 153.76 yen.
Hong Kong’s Hang Seng rose by 1.6% to 17,287.28, and the Shanghai Composite index increased by 0.4% to 2,893.08, boosted by positive industrial profit data from the first half of 2024. Australia’s S&P/ASX 200 advanced 0.8% to 7,989.60, and South Korea’s Kospi climbed 1.2% to 2,765.53. Taiwan’s Taiex gained 0.2%, while the SET in Bangkok was closed for a holiday.
On Friday, the S&P 500 experienced its best day in seven weeks, rising 1.1% to 5,459.10 after strong profit reports from companies like 3M. The Dow Jones Industrial Average jumped 1.6% to 40,589.34, and the Nasdaq composite increased by 1% to 17,357.88. Smaller stocks also performed well, with the Russell 2000 index climbing 1.7%, bringing its monthly gain to 10.4%.
Nvidia rose 0.7%, reducing its weekly loss to 4.1%. Other members of the “Magnificent Seven” tech stocks also recovered some losses after profit reports from Tesla and Alphabet raised concerns about overvaluation due to AI technology enthusiasm. 3M saw a significant leap of 23% after reporting better-than-expected profit and revenue for the latest quarter and raising its profit forecast for 2024.
Broad market gains were bolstered by Friday’s inflation update, which confirmed expectations for future interest rate cuts. U.S. consumers paid prices in June that were 2.5% higher than a year earlier, down from May’s 2.6% rate, according to the personal consumption expenditures index.
Early Monday, U.S. benchmark crude oil rose by 45 cents to $77.61 per barrel, and Brent crude picked up 49 cents to $80.77 per barrel. The euro edged up to $1.0861 from $1.0857.
This positive start for Asian stocks is set against a backdrop of significant upcoming central bank decisions, with broader market optimism buoyed by encouraging economic data and corporate earnings.
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