Asian stocks saw a significant rise on Monday, driven by speculation over potential interest rate cuts by major central banks, which increased appetite for risk-driven assets. Technology-heavy indexes were the standout performers, particularly boosted by chipmakers. This surge followed NVIDIA Corporation’s (NASDAQ:NVDA) unveiling of a new line of artificial intelligence chips, which was met with high demand from the rapidly growing AI industry, resulting in impressive quarterly earnings.
India’s Nifty 50 index also stood out, reaching record highs as exit polls suggested the NDA alliance, led by the BJP party, was poised to win the 2024 general elections. This expected victory marked a third consecutive term for Prime Minister Narendra Modi, further bolstering investor confidence.
Regional stocks mirrored a strong finish on Wall Street on Friday. An in-line reading on a key inflation metric prompted traders to anticipate an interest rate cut by the Federal Reserve in September, with U.S. stock index futures rising in Asian trade.
Attention this week is on interest rate decisions in Europe and Canada. Both the European Central Bank and the Bank of Canada are widely expected to begin reducing interest rates, potentially initiating a wave of monetary easing globally. The Federal Reserve is also scheduled to meet next week, although it is anticipated to keep rates steady for now.
Hong Kong’s Hang Seng index and South Korea’s KOSPI were among the leading performers for the day, each surging between 2% and 2.5%. Chipmakers such as Semiconductor Manufacturing International Corp (HK:0981) and SK Hynix Inc (KS:000660) saw strong gains following the Nvidia announcement.
The Taiwan Weighted index climbed 1.9%, driven by a nearly 4% rise in TSMC (TW:2330), Nvidia’s largest supplier and a major beneficiary of the AI boom, hitting a record high. Tech sector gains also led Japan’s Nikkei 225 index to add 0.8%, while Australia’s ASX 200 rose by 0.7%.
India’s Nifty 50 index surged as much as 3% to a record high of 23,321 points, following weekend exit polls that indicated a likely win for the NDA alliance in the 2024 general elections. The strength of the Nifty was signaled by a 3.5% surge in Gift Nifty 50 Futures before the market opened.
Investors, both local and foreign, have largely welcomed Modi’s business-friendly policies, which have driven significant economic growth in India in recent years and propelled the Nifty 50 to a series of record highs. Manufacturing and infrastructure stocks are anticipated to benefit from another BJP term. The official election results are expected on Tuesday morning.
In contrast, Chinese stocks lagged amid mixed PMI data. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose only marginally on Monday. Private PMI data indicated stronger-than-expected growth in the manufacturing sector for May, marking the seventh consecutive month of expansion. However, this was in stark contrast to official PMI data from the previous week, which reported an unexpected contraction in the manufacturing sector.
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