Asian stocks bounced back on Monday with investor mood upbeat ahead of a week of big tech earnings posts and key central bank meetings.
A trio of central bank meetings could see the United States and UK open the door to easing, while Japan might finally lift borrowing costs in a step toward “normality”.
That optimism saw Japan’s Nikkei share average rebound from a three-month low hit in the previous session, with sentiment also lifted after Wall Street finished higher at the end of last week.
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The Nikkei share average rallied 2.13%, or 801.22 points, to close at 38,468.63, while the broader Topix was ahead 2.23%, or 60.13 points, to 2,759.67.
Monday marked the Nikkei’s first day of gains in nine sessions. The index hit its weakest level since late April last week amid a surge in the yen and declines in US technology stocks.
Wall Street’s major indexes ended higher on Friday as investors flocked back to the tech megacaps that had triggered broad sell-offs earlier in the week, and US inflation data boosted optimism the Federal Reserve will soon commence cutting interest rates.
All but 11 of the Nikkei’s 225 constituents advanced, and big name tech stocks surged to give the overall index a hefty lift. Chip-related shares Tokyo Electron and Advantest were up 3.7% and 4.1%, respectively. AI-focused startup investor SoftBank Group climbed 2.3%.
China stocks remained largely steady as investors looked to an upcoming Politburo meeting, hoping for announcements of stimulus measures to support the world’s second-largest economy. In contrast, Hong Kong stocks followed regional peers and ended well in the green.
Market analysts from Goldman Sachs predict, though, that the July Politburo meeting will maintain a cautious stance on growth challenges, strengthening their support for fiscal and housing measures.
US Jobs Report
The blue-chip CSI300 index fell 0.54% while the Shanghai Composite Index edged up just 0.03%, or 0.95 points, to 2,891.85. The Shenzhen Composite Index on China’s second exchange dropped 0.47%, or 7.40 points, to 1,562.19.
Meanwhile, the Hang Seng Index had a more successful session, gaining 1.28%, or 217.03 points, to close at 17,238.34.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Mumbai, Singapore, Taipei and Manila were also up. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.9%, after losing 2% last week.
Also due this week is the US jobs report for July, closely watched surveys on US and global manufacturing, along with Eurozone gross domestic product and inflation data. The US Treasury will outline how much bonds it plans to sell for the quarter.
After a benign June inflation report, markets are wagering the Federal Reserve will lay the groundwork for a September rate cut at its policy meeting on Wednesday.
Futures are fully priced for a quarter-point easing and even imply a 12% chance of 50 basis points, and have 68 basis points of easing priced in by Christmas.
The Bank of Japan also meets Wednesday and markets imply a 70% chance it will hike rates by 10 basis points to 0.2%, with some chance it could move by 15 basis points.
Oil Prices Edge Ahead
Investors are less sure whether the Bank of England will ease at its meeting on Thursday, with futures showing a 51% probability of a cut to 5%.
Eurostoxx 50 futures rose 0.5% and FTSE futures 0.4%. S&P 500 futures added 0.4%, while Nasdaq futures rose 0.7%.
Around 40% of the S&P500 by market worth report this week, including tech darlings Microsoft, Apple, amazon.com and Facebook-parent Meta Platforms.
In currency markets, the Japanese yen extended its recent rally with the dollar slipping to 153.40 yen and nearer to last week’s low of 151.93.
In commodity markets, gold firmed 0.4% to $2,394 an ounce, supported by the prospect of a dovish Fed.
Oil prices edged up on the Middle East news, though concerns about Chinese demand lingered in the background. Brent gained 31 cents to $81.44 a barrel, while US crude rose 22 cents to $77.38 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 2.13% at 38,468.63 (close)
Hong Kong – Hang Seng Index > UP 1.28% at 17,238.34 (close)
Shanghai – Composite > UP 0.03% at 2,891.85 (close)
London – FTSE 100 > UP 0.94% at 8,363.42 (0932 BST)
New York – Dow > UP 1.64% at 40,589.34 (Friday close)
- Reuters with additional editing by Sean O’Meara
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