On Monday, Asian stocks demonstrated a collective rebound, recovering some of the ground lost in the previous week’s declines, albeit with a degree of caution prevailing as investors awaited crucial cues regarding U.S. inflation and interest rates.
The positive upswing in regional markets found its impetus in a strong finish on Wall Street the preceding Friday. Particularly, the surge in technology stocks propelled the NASDAQ Composite to achieve a record-high close, instilling a sense of optimism among investors in Asia.
Nevertheless, U.S. stock index futures witnessed a slight dip during Asian trading hours, with market activity expected to remain subdued owing to the Memorial Day holiday observed in the United States.
In China, both the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes exhibited marginal gains of about 0.1%, indicating a mild recovery from the losses sustained in the previous week. Notably, data released on Monday revealed that industrial profits in China had shown steady growth in April compared to the preceding month, signaling positive developments in one of the nation’s pivotal industries. However, the extent of gains in Chinese markets was limited by a tempering of optimism surrounding recent stimulus measures implemented by Beijing. Analysts raised concerns regarding the execution and financing of these measures, which tempered market enthusiasm.
Conversely, Hong Kong’s Hang Seng index experienced a decline of 0.4%, primarily attributable to losses incurred by mainland stocks.
Across most Asian markets, gains were modest, with investors exercising caution as they awaited the release of key U.S. inflation data scheduled later in the week. The forthcoming PCE price index data, regarded as the Federal Reserve’s preferred gauge for inflation, is anticipated to influence market sentiment regarding U.S. interest rates.
Last week witnessed a waning of expectations concerning U.S. interest rate cuts, exerting downward pressure on Asian stocks as traders adjusted their outlooks, recalibrating their bets on a rate cut possibly occurring in September.
In Japan, both the Nikkei 225 and the broader TOPIX index registered gains of 0.3%, reflecting a cautious yet optimistic sentiment among investors. Key economic data releases, including inflation, retail sales, and industrial production figures from Japan, are awaited later in the week.
South Korea’s KOSPI index demonstrated a more pronounced increase of 0.7%, buoyed by notable gains in technology stocks. The pervasive excitement surrounding artificial intelligence, particularly in the wake of robust results from NVIDIA Corporation, propelled shares of memory chip manufacturer SK Hynix Inc to reach a record high.
Moreover, China, Japan, and South Korea initiated trilateral trade talks, contributing further to positive sentiment across the region.
In Australia, the ASX 200 index rebounded by 0.7%, recovering from the losses incurred in the previous week.
Meanwhile, futures for India’s Nifty 50 index hinted at a mildly positive opening, with the index maintaining proximity to recent record highs, suggesting sustained investor optimism in the Indian market.