FX.co ★ Asian Shares Gain As US Inflation Cools

Asian markets experienced a notable surge on Monday, inspired by a broad rally on Wall Street last Friday. This uptick occurred as softer inflation data fueled optimism around potential interest rate cuts later this year.

Investors are now focusing on the forthcoming earnings announcements from major U.S. tech companies and key policy meetings across central banks in the United States, Japan, and the United Kingdom. These events are expected to offer further market direction.

The U.S. dollar began the week on a weaker note, while oil and gold prices increased amid escalating tensions in the Middle East.

The U.S. Federal Reserve is set to conclude its policy meeting on Wednesday, potentially shedding light on the likelihood of a rate cut in September. Additionally, the U.S. employment data, set for release on Friday, will be closely monitored.

In China, the Shanghai Composite Index saw a slight uptick, closing at 2,891.85 ahead of the upcoming July PMI data. Hong Kong's Hang Seng Index rose by 1.28% to 17,238.24, buoyed by data indicating accelerated growth in China's industrial profits for June.

Japanese markets led regional gains ahead of the Bank of Japan’s policy meeting on Wednesday, where a rate hike is under consideration. The Nikkei 225 surged by 2.13% to 38,468.63, marking its first increase in nine sessions. The broader Topix Index also gained 2.23% to end at 2,759.67.

Chip-related stocks saw significant gains, with Tokyo Electron and Advantest each jumping approximately 4%. Meanwhile, SoftBank Group, an investor focused on AI startups, climbed 2.3%. Silicon wafer manufacturer Shin-Etsu Chemical soared 8.6% following stronger-than-expected first-quarter earnings. Conversely, Eisai plummeted almost 13% after an Alzheimer's therapy, developed in partnership with Biogen Inc., was rejected by the European Union regulator.

In Seoul, stocks continued to rise for the second consecutive day, fueled by hopes that the Federal Reserve might hint at a potential rate cut in September. The Kospi Index increased by 1.23% to 2,765.53. Chipmaker SK Hynix rose by 2%, Hyundai Motor surged 4.9%, and auto parts maker Hyundai Modis edged up 1.1%.

Australian markets also recorded strong gains in anticipation of crucial second-quarter domestic inflation data due on Wednesday. The S&P/ASX 200 increased by 0.86% to 7,989.60, while the All Ordinaries Index finished up 0.87% at 8,224.30.

Tech stocks performed well, with Wisetech Global, Life360, and Macquarie Technology each adding 2-3%. Star Entertainment Group saw a significant jump of 14.7%, reaching a four-month high amidst reports of interest from four international bidders over the past two months.

Across the Tasman Sea, New Zealand’s S&P/NZX-50 Index slipped by 0.29% to 12,313.62.

In the U.S., stocks closed a volatile week on a high note last Friday, as a favorable June PCE inflation report bolstered hopes for further rate cuts this year. The PCE price index inched up by 0.1% in June, aligning with expectations, while the annual growth rate slowed to 2.5% from 2.6% in May.

Personal income in the U.S. rose less than expected in June, though personal spending matched estimates. Meanwhile, U.S. consumer sentiment showed a slight improvement compared to earlier estimates in July.

The Dow Jones Industrial Average surged by 1.6%, the tech-heavy Nasdaq Composite rallied 1%, and the S&P 500 increased by 1.1%.