Asian stocks started the week with gains ahead of central bank policy meetings in the United States and Japan, after a broad rally on Wall Street capped a tumultuous week.
US futures and oil prices rose.
In Tokyo, the Nikkei 225 index rose 2.5% to 38,587.87.
The main focus for Asian markets this week will be the Bank of Japan’s monetary policy meeting on Wednesday, with investors expecting the central bank to raise its key interest rate from near zero to possibly 0.3%.
The U.S. Federal Reserve concludes its policy meeting on Wednesday and is expected to leave its benchmark interest rate unchanged. But it could provide further support for a rate cut in September. This week also sees U.S. jobs data on Friday.
“In a monumental week for macro watchers, everyone is hoping for calm as they brace for the inevitable storm of volatility,” said Stephen Innes of SPI Asset Management in a commentary.
Since the Federal Reserve began raising interest rates in March 2022 to combat inflation, he added, “the market’s big mistake has been to anticipate rate cuts prematurely — way too early and way too aggressively. It’s like expecting dessert before you’ve finished the main course.”
The Japanese yen has weakened against the U.S. dollar in anticipation of such a change. Last week, the U.S. dollar was hovering around 154 yen. On Monday morning, it was trading at 153.42 yen, down from 153.76 yen.
Hong Kong’s Hang Seng rose 1.8% to 17,331.24 and the Shanghai Composite index was broadly unchanged at 2,892.10 as official data on Saturday showed industrial profits rose 3.5% in the first half of 2024 from a year ago. That was a glimmer of positive news after recent interest rate cuts and other piecemeal stimulus that followed a top-level policy meeting by the ruling Communist Party earlier this month.
Australia’s S&P/ASX 200 rose 0.8% to 7,988.20. In South Korea, the Kospi rose 1.2% to 2,765.05.
Elsewhere, Taiwan’s Taiex rose 0.7 percent. The SET in Bangkok was closed for a holiday.
Friday is the S&The P 500 jumped 1.1 percent to 5,459.10 for its best day in seven weeks after 3M and several other large companies reported better spring earnings than analysts had expected. The Dow Jones Industrial Average rose 1.6 percent to 40,589.34, while the Nasdaq Composite gained 1 percent to 17,357.88.
The widespread gains in the market included rallies for both Big tech giants And smaller sharesThe Russell 2000 index of smaller stocks rose 1.7%, bringing its gain for the month so far to 10.4%.
Nvidia rose 0.7%, limiting its losses for the week to 4.1%. Most other members of the small group of tech stocks known as the “Magnificent Seven” also recovered some of their losses from earlier in the week.
They were under pressure after the latest earnings reports from Tesla And Alphabet caused investors to get carried away in their madness surrounding artificial intelligence technology and the prices of Magnificent Seven were made too high.
3M rose 23% after reporting stronger earnings and revenue for its latest quarter than analysts had expected. The company behind the Scotch-Brite and Nexcare brands also raised the low end of its full-year 2024 profit forecast range.
Market observers had hoped for such an increase in profits because a market in which many stock prices rise is seen as healthier than one driven by just a handful of dominant elites.
Stocks generally got a boost from Friday’s latest update on inflationwhich further strengthened investors’ expectations about upcoming rate cuts interest rates.
U.S. consumers paid prices that were 2.5% higher in June than a year earlier, down from inflation of 2.6% in May, the Commerce Department said Friday. That’s according to the personal consumption expenditures index, which the Federal Reserve pays more attention to than the consumer price index, or CPI.
In other trading, benchmark U.S. crude rose 18 cents to $77.34 a barrel in electronic trading on the New York Mercantile Exchange on Monday morning.
Brent crude, the international standard, rose 28 cents to $80.56 a barrel.
The euro rose from $1.0857 to $1.0862.