The Asia-Pacific markets saw positive movement on Monday, with Japan’s Nikkei 225 leading gains in the region. This surge came after a key U.S. inflation report was released late last Friday, raising hopes for a potential interest rate cut. The U.S. June personal consumption expenditures price index indicated a rise of 0.1% month on month and 2.5% compared to the same period a year ago, in line with estimates from economists. The Nikkei index rose by 2.26%, while the broader Topix was up by 2.02%, showcasing a strong performance for the day. This increase in the Nikkei index marked a significant turnaround from its eight-day losing streak.
Among the top gainers in the Nikkei index was automaker Mitsubishi Motors, with a rise of over 6%. This surge was attributed to a report from Nikkei Asia, stating that the company would join the Honda-Nissan alliance to standardize in-vehicle software. On the other hand, shares of drugmaker Eisai plunged by 13% after the European Union’s regulator did not approve its Leqembi treatment for Alzheimer’s disease. This downturn made Eisai the biggest laggard among the 10 Nikkei 225 stocks that fell on a day of overall market rally.
Looking ahead, a key event in the region will be the Bank of Japan’s monetary policy meeting scheduled to start on July 30. A Reuters poll of economists anticipates a potential rate hike by 10 basis points to 0.1%. There are also suggestions, such as a note from ING, that the central bank could increase rates by 15 basis points and simultaneously reduce its bond-buying program. The analysts at ING expressed confidence in the economy’s recovery track after an unexpected contraction in the first quarter of 2024, citing solid wage growth for May as a positive indicator. Additionally, other important data to watch from the region include China’s July PMI data and Australia’s upcoming release of inflation figures before the central bank’s Aug. 6 monetary policy meeting.
In the Asia-Pacific region, South Korea’s Kospi index rose by 1.3%, while the small-cap Kosdaq saw a 0.59% increase. Hong Kong’s Hang Seng index climbed by 1.1%, contrasting with mainland China’s CSI 300 which saw a slight slip of 0.3%, predominantly influenced by the performance of utilities stocks. Furthermore, Australia’s S&P/ASX 200 index was up by 0.84%, showcasing positive movement in the market. The Taiwan Weighted Index rebounded by 1.04%, following a more than 3% decline on the previous Friday. The market in Taiwan had also been affected by a typhoon, leading to closure on Wednesday and Thursday.
On the global front, Friday in the U.S. saw significant movements with the Dow Jones Industrial Average rallying by 1.64%, the S&P 500 climbing by 1.11%, and the Nasdaq Composite gaining 1.03%. These positive movements in the U.S. markets could have a potential impact on the sentiment and performance of markets in the Asia-Pacific region in the coming days.
The recent positive performance in the Asia-Pacific markets, coupled with key upcoming events and data releases, indicate a sense of resilience and momentum in the region. Investors and market participants will be closely monitoring developments to gauge the direction of the markets in the near future.
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