Asian markets largely extended their gains. This improvement in sentiment comes after last week’s turmoil, which was driven by fears of a potential US recession. Investors have since seen these concerns ease somewhat, especially ahead of critical US inflation data set to be released later this week. In Asia, Tokyo’s Nikkei index led the charge, bouncing back from a long weekend to reclaim ground lost during last Monday’s market rout. The rally was supported by a weaker yen and the Bank of Japan’s commitment not to raise interest rates further.
Despite the calmer atmosphere in global markets, caution remains prevalent among investors. Last week’s weaker-than-expected US jobs report has left many worried about the health of the world’s largest economy. Additionally, geopolitical tensions continue to cast a shadow over market sentiment. The upcoming release of US consumer and wholesale price data is anticipated with some trepidation, as it could influence the Federal Reserve’s next steps in monetary policy. Analysts have noted that these inflation readings could lead to significant market shifts. A lower-than-expected inflation figure might exacerbate fears of economic weakness, while a stronger number could dampen hopes for rate cuts.
The Federal Reserve is in a delicate position, trying to balance fostering economic growth with controlling inflation. Some experts argue that the recent soft economic data suggest the Fed may have delayed too long in easing monetary policy. According to Luca Santos of ACY Securities, the timing and extent of the Fed’s rate cuts are crucial. Delaying could push the US economy into a deeper slowdown, while aggressive cuts might reignite inflation or cause financial instability.
Following a subdued performance on Wall Street, Asian markets fluctuated between gains and losses, continuing their strong start to the week. Tokyo surged more than two percent, briefly surpassing its August highs before last Monday’s drop. Other markets in Hong Kong, Sydney, Singapore, Wellington, Manila, and Jakarta also recorded gains.
Meanwhile, oil prices saw a slight decline but remained around eight percent higher for the week. This increase is largely driven by fears of an escalating conflict in the Middle East and rising tensions involving major oil producer Russia. The White House issued a warning on Monday about the possibility of a significant set of attacks by Iran and its proxies against Israel, following the recent assassination of top leaders from Hezbollah and Hamas.
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.
