Asia’s major stock indexes began the week on the front foot as optimism over a cut in US interest rates returned while Beijing’s most significant effort yet to revive its ailing property sector also boosted sentiment.
Shares across the region rallied to two-year highs, buoyed by China’s “historic” steps on Friday to stabilise its crisis-hit real estate sector, while a milder-than-expected inflation report last week has investors once again pricing in US rate cuts as early as September.
Japan’s Nikkei share average rose, hitting 39,000 points for the first time in a month, as higher expectations for a US rates U-turn kept market sentiment upbeat.
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The Nikkei closed 0.73% higher at 39,069.68, jumping over 1% during trading before profit-taking set in. It was the first time the benchmark index reached the psychologically significant 39,000-point range since April 15. The broader Topix was up 0.82% at 2768.04.
The Nikkei hit an all-time high of 41,087.75 earlier this year before falling nearly 5% last month in its largest monthly drop since December 2022. It is up about 16% this year.
On Monday, buying was widespread, with 183 of the index’s 225 constituents advancing. Gains narrowed, however, as investors sought to lock in profits.
Mainland China and Hong Kong shares gained as well, lifted by gold stocks, while equity investors also embraced Beijing’s latest measures to rescue its beleaguered property sector, which has been a key drag on the world’s second-largest economy.
China’s central bank is to make 1 trillion yuan ($138.33 billion) in extra funding available and ease mortgage rules, with local governments set to be allowed to buy some apartments.
China’s blue-chip CSI300 index was up 0.35% with, earlier in the session, its financial sector sub-index higher by 0.31%, the consumer staples sector up 0.39%, the real estate index up 1.18% and the healthcare sub-index down 0.66%.
The Shanghai Composite Index rose 0.54%, or 17.12 points, to 3,171.14, while the Shenzhen Composite Index on China’s second exchange advanced 0.47%, or 8.39 points, to 1,793.98.
Chinese H-shares listed in Hong Kong – stocks belonging to companies from the Chinese mainland – rose 0.42% to 6,963.5, while the Hang Seng Index gained 0.42%, or 82.61 points, to end at 19,636.22.
New Taiwan President
Elsewhere across the region, in earlier trade, Taiwan’s Taiex edged 0.1% higher after Lai Ching-te was inaugurated as Taiwan’s new president. Lai is expected to uphold the island’s de facto independence policy from China and seek to bolster its defences against Beijing, which claims the island as Chinese territory.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.25% to a two-year top thanks to early gains in Australia and South Korea.
After world stocks made record highs last week in the wake of softening US inflation, focus this week turns to policy speeches, meeting minutes, a central bank decision in New Zealand and Nvidia results, with a break in the data calendar.
European Central Bank board member Isabel Schnabel said the June rate cut that markets have priced in for Europe “may be appropriate” but seemed to pour cold water on traders’ expectations for a series of cuts to follow.
Two-year US Treasury yields ended last week four basis points (bps) lower at 4.825% and were steady in Asia trade. Ten-year US yields were down 8.4 bps last week to 4.42%. Two-year bund yields went up 2 bps to 2.988%.
Elsewhere, in commodities, three-month nickel surged to its strongest in nine months due to unrest in nickel exporter New Caledonia.
In currency markets the dollar logged its largest weekly drop on the euro in two-and-a-half months last week, but was steady in Asia morning trade on Monday.
The euro was broadly steady at $1.0873 on Monday. The yen was a fraction softer at 155.82 per dollar.
S&P 500 futures rose 0.2% in early trade. Bitcoin dipped about 1% to $65,863.
Key figures
Tokyo – Nikkei 225 > UP 0.73% at 39,069.68 (close)
Hong Kong – Hang Seng Index > UP 0.42% at 19,636.22 (close)
Shanghai – Composite > UP 0.54% at 3,171.14 (close)
London – FTSE 100 > UP 0.30% at 8,445.52 (0934 BST)
New York – Dow > UP 0.34% at 40,003.59 (Friday close)
- Reuters with additional editing by Sean O’Meara
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