Asian stocks experienced a notable rise, spurred by a surge in large US tech shares, which propelled Wall Street to another record high. Most benchmarks in Asia saw gains, with Japan, Australia, and South Korea leading the charge. The S&P 500 has now achieved 30 all-time highs this year, challenging concerns about the market’s narrow breadth and potential vulnerability to surprises. The dollar also strengthened against most of its Group of 10 peers.
Chip stocks in Asia significantly contributed to the gains in the MSCI Asia Pacific index. Tesla’s Chinese suppliers saw their shares advance after the electric-car maker received approval to test its advanced driver-assistance system on some Shanghai streets. In South Korea, SK Hynix Inc. shares rose to a 24-year high following an analyst’s prediction of potential upward revisions to the chipmaker’s future earnings consensus. Meanwhile, Australia’s central bank maintained its benchmark interest rate at a 12-year high of 4.35% for the fifth consecutive meeting, indicating that future rate hikes remain a possibility. The decision left Australia’s currency and bonds largely unchanged.
Kelvin Tay, regional chief investment officer of UBS Global Wealth Management, mentioned in an interview that the dollar is expected to remain resilient in the short term, mainly because other major central banks, like the ECB, are likely to cut rates first. Hong Kong announced it would end its long-standing practice of shutting markets during typhoons and major storms starting on 23 September. Analysts believe this change will enhance market liquidity and competitiveness over time.
As traders prepared for retail-sales data and numerous Federal Reserve speakers ahead of Wednesday’s US holiday, Treasuries edged higher in Asia after declining on Monday amid a surge of high-grade corporate bond sales exceeding $21 billion. The US benchmark index surpassed 5,470 on Monday, with Tesla Inc. and Apple Inc. leading the gains among megacap stocks. The Nasdaq 100 neared the 20,000 mark as Micron Technology Inc. reached a record high, following target raises by several firms.
James Demmert of Main Street Research expressed confidence that the S&P 500 could reach 6,000 by year-end, driven by improved earnings and potential rate cuts. He suggested that even if the Federal Reserve does not cut rates this year, it would still be bullish for equities, particularly tech stocks.
Optimism regarding a resilient economy, improving corporate earnings, and potential rate cuts has boosted US equities by about 15% this year. Fed Bank of Philadelphia President Patrick Harker indicated that one rate cut might be appropriate for this year based on his current forecast. Investors are closely monitoring the implications of Beijing’s latest move in its trade tensions with Brussels, after China initiated an anti-dumping probe on pork imports from the European Union. This move comes as the EU examines Chinese subsidies across various industries and prepares to impose tariffs on electric car imports starting in July.
In the commodities market, oil maintained its largest advance in a week, buoyed by risk-on sentiment in broader markets despite a mixed outlook for crude. Copper prices recovered from their lowest close since mid-April, while gold remained relatively unchanged.
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.
