Asian stocks showed gains on Monday, driven by relief that Israel’s recent conflict with Iran avoided a full escalation. Israel’s weekend strike against Iran, while serious, steered clear of targeting crucial oil and nuclear facilities, lessening concerns of a sharp geopolitical escalation and prompting a downturn in oil prices. This calming effect rippled through the region’s markets, with most indices seeing positive movement. Adding to the momentum, U.S. stock index futures saw a boost during Asian trade as optimism over the Middle East bolstered investor sentiment.
Japanese markets were notably strong performers, as the ruling Liberal Democratic Party (LDP) lost its parliamentary majority. Investors anticipated that this heightened political uncertainty would make the Bank of Japan (BOJ) less likely to pursue additional interest rate hikes, creating a favourable environment for stocks. Both the Nikkei 225 and TOPIX indexes rose significantly, up 1.5% and 1.2%, respectively. The LDP’s parliamentary loss suggests the party will need alliances with smaller, regional parties, which could lead to a more divided economic approach and a challenging climate for cohesive policy-making. Despite the uncertain political landscape, the yen’s sharp decline gave export-oriented stocks a strong boost, reflecting investor sentiment that the BOJ might hold back on rate increases in the near term.
The BOJ is scheduled to meet later in the week, with analysts widely predicting that rates will remain unchanged. This expectation is further encouraging investor confidence across Japan’s key stock indices.
Across broader Asian markets, stocks also trended upwards, with the focus shifting to a busy week of U.S. technology earnings reports and significant economic data. The “Magnificent Seven” of Wall Street’s major tech firms are set to release earnings, potentially influencing equity markets on a global scale. In Australia, the ASX 200 edged up by 0.1%, with investors eyeing the upcoming inflation data. In South Korea, the KOSPI added 0.6%, driven by interest in technology stocks, particularly in the artificial intelligence sector.
Chinese markets, however, trailed behind their regional counterparts. Both the Shanghai Shenzhen CSI 300 and the Shanghai Composite indexes remained relatively flat, even as investors awaited fresh Purchasing Managers Index (PMI) data due this week. This follows a series of stimulus measures recently outlined by Beijing, aiming to rejuvenate economic growth. Meanwhile, Hong Kong’s Hang Seng index saw little movement.
India’s Nifty 50 index futures signalled a positive start, with local stocks potentially benefiting from bargain buying after facing substantial losses through October. Indian markets also anticipate further corporate earnings reports over the coming days, which could add momentum to the recent upward trend.
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.
