Asian stocks started the week with gains on Monday, as investors looked ahead to central bank policy meetings in the United States and Japan. The focus was on the Bank of Japan's monetary policy meeting on Wednesday, where expectations were high for a potential interest rate hike from its near-zero level. The U.S. Federal Reserve is also expected to keep its benchmark rate unchanged at the conclusion of its two-day meeting on Wednesday.
U.S. futures and oil prices rose in anticipation of these events, with U.S consumers paying prices that were 2.5% higher than a year earlier according to the personal consumption expenditures index.
In Tokyo, the Nikkei 225 index surged 2.1%, while South Korea's KOSPI and Hong Kong's Hang Seng rose around 1% each. Tech stocks saw bargain buying and expectations of rate cuts, with Microsoft Corporation (NASDAQ:MSFT), Apple Inc (NASDAQ:AAPL), and Meta Platforms Inc (NASDAQ:META) set to report second-quarter earnings in the coming days.
But Chinese markets continued to lag their regional peers, as sentiment towards the country showed little signs of improving ahead of more key economic readings this week. Fears of a slowing Chinese economic recovery and U.S. political uncertainty weighed on Chinese markets, with China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes falling 0.4% and 0.1%, respectively.
Broader Asian markets rose, with Australia's ASX 200 adding 0.8%. India's shares were up for the second straight session while extending to their record peak, mainly supported by gains from property, banking sectors, and oil and gas.
U.S. stock index futures also rose in Asian trade on this notion of potential rate cuts.
Regional stocks took positive cues from a strong finish on Wall Street on Friday, as signs of easing inflation drove up bets that the Fed will eventually cut interest rates this year.
The technology sector led gains in Asian stocks, with Japan's index surging 2.2%, South Korea's and Hong Kong's rising around 1% each. Tech stocks saw a degree of bargain buying after being walloped by profit-taking over the past two weeks.
But investors were seen moving back into the sector, especially ahead of several key earnings due this week. U.S. tech giants Microsoft Corporation (NASDAQ:MSFT), Apple Inc (NASDAQ:AAPL), and Meta Platforms Inc (NASDAQ:META) are set to report second-quarter earnings in the coming days, offering up more cues on the industry and artificial intelligence.
China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.4% and 0.1%, respectively, remaining close to five-month lows and seeing little relief from negative sentiment towards China.
Fears of a slowing Chinese economic recovery- following a series of weak readings through July- sparked extended selling in Chinese markets.
U.S. political uncertainty also weighed on Chinese markets, especially with investors uncertain over how the next U.S. administration will treat Beijing.
Focus this week is on data from the country for July, for more cues on business activity.
