Asian stocks generally advanced on Monday, building on a recovery from the previous week. This uptick was driven by growing optimism that fears of a U.S. recession may have been overstated. The focus for investors now shifts to key inflation data due later this week.
However, Chinese markets lagged behind, having largely missed out on the recent rebound due to ongoing concerns about a slowdown in the country’s economy. This week will also see the release of important June quarter earnings reports from major companies.
Trading volumes across Asia were subdued due to a market holiday in Japan, although the Nikkei 225 Futures saw some gains. The positive momentum in the region was influenced by a strong performance on Wall Street last Friday, where U.S. stock benchmarks recovered all losses incurred earlier in the week. In Asian trading, U.S. stock index futures dipped slightly.
Attention this week is primarily on U.S. consumer price index (CPI) data set to be released on Wednesday, which is expected to offer clues on when the Federal Reserve might begin reducing interest rates. Investors remain divided on whether the Fed will implement a 25 or 50 basis point cut in September.
South Korea’s KOSPI index led gains in Asia, rising by 0.9%, buoyed by strong performances in technology stocks. Australia’s ASX 200 increased by 0.5%, while most Southeast Asian markets saw slight gains.
In contrast, Chinese stock indexes, including the Shanghai Shenzhen CSI 300 and the Shanghai Composite, traded within a narrow, flat-to-lower range on Monday. Hong Kong’s Hang Seng index declined by 0.2%. Sentiment towards China continues to be weighed down by concerns over the country’s sluggish economic recovery, particularly after a series of weak data for July.
Despite some signs of improvement in recent inflation figures, there remains uncertainty about whether China’s disinflationary trend is reversing. Investors are also closely watching earnings reports this week from some of China’s largest internet companies, including Tencent Holdings, Alibaba Group, and JD.com.
In India, futures for the Nifty 50 index indicated a muted start to the week. Investor sentiment was dampened by fresh allegations from short-seller Hindenburg Research against the Securities and Exchange Board of India (SEBI). Hindenburg claimed that SEBI’s head, Madhabi Puri Buch, had investments in offshore funds connected to the Adani Group, which had previously been accused by Hindenburg of fraud and share price manipulation.
In response, SEBI issued a warning on Sunday, urging investors to stay calm and not react hastily to Hindenburg’s reports. The Nifty and the BSE Sensex 30 are both near record highs after a strong rally through most of 2024, but this has also made Indian stocks more susceptible to volatility and profit-taking. Additionally, India’s CPI data is due on Monday, which is expected to show some easing in price pressures.
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.
