Asian shares started the week with gains ahead of central bank policy meetings in the United States and Japan, following a broad rally on Wall Street that 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 on Asian markets this week will be the Bank of Japan’s monetary policy meeting on Wednesday, where investors widely expect the central bank to raise its key interest rate from near zero to perhaps 0.3%.
The US 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, US jobs figures will also be released on Friday.
“In a monumental week for macro watchers, everyone is hoping for calm as they brace for the inevitable storm of volatility,” Stephen Innes of SPI Asset Management said in a commentary. “
Since the Federal Reserve began raising interest rates in March 2022 to combat inflation, he added, “the big market blunder has been prematurely anticipating rate cuts — far too early and far too aggressively.” It’s like expecting dessert before you finish the main course.”
In anticipation of such a change, the Japanese yen has weakened against the US dollar. Last week the US dollar hovered around 154 yen. Early Monday, the price was trading at 153.42 yen, down from 153.76 yen.
Hong Kong’s Hang Seng added 1.8% to 17,331.24 and the Shanghai Composite index was virtually unchanged at 2,892.10 as official data on Saturday showed industrial gains in the first half of 2024 rose by 3. 5% increase compared to last year. That was a glimmer of positive news after recent interest rate cuts and other piecemeal stimulus measures that followed a top-level policy meeting of 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 gained 0.7%. The SET in Bangkok was closed for a public holiday.
On Friday, the S&P 500 rose 1.1% to 5,459.10, its best day in seven weeks, after 3M and several other major companies posted better profits than analysts expected this spring. The Dow Jones Industrial Average rose 1.6% to 40,589.34, while the Nasdaq composite rose 1% to 17,357.88.
The market’s widespread gains include rallies for both Big Tech Giants And smaller inventories. The Russell 2000 index of smaller stocks climbed 1.7%, bringing its month-to-date gain to 10.4%.
Nvidia rose 0.7% to narrow its loss for the week to 4.1%. Most other members of the small group of technology stocks known as the “Magnificent Seven” have also pared some of their losses from earlier in the week.
They were under pressure after the latest earnings reports Tesla And Alphabet caused investors to get carried away in their madness surrounding artificial intelligence technology and overpriced Magnificent Seven.
3M rose 23% after reporting stronger earnings and revenue for the latest quarter than analysts expected. The company behind the Scotch-Brite and Nexcare brands also raised the lower end of its expected profit margin for full-year 2024.
Market watchers have hoped for such an expansion in gains because a market with many rising stocks is considered healthier than one lifted by just a handful of dominating elites.
Share prices broadly got a boost after Friday’s latest update inflationwhich further reinforced investor expectations about the coming cuts interest rates.
U.S. consumers paid prices in June that were 2.5% higher than a year earlier, lower than May’s inflation rate of 2.6%, the Commerce Department said Friday. This is evident from the index of personal consumption expenditure, which the Federal Reserve pays more attention to than the consumer price index (CPI).
In other trades early Monday, U.S. benchmark crude rose 18 cents to $77.34 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, rose 28 cents to $80.56 a barrel.
The euro rose from $1.0857 to $1.0862.