Asian-Pacific markets saw a positive start to the week, with Japan’s Nikkei 225 leading gains after a key U.S. inflation report was released late last Friday. The U.S. June personal consumption expenditures price index rose 0.1% month on month and 2.5% year on year, meeting economists’ estimates. The Nikkei surged by 2.26%, while the broader Topix index was up by 2.02%. If the Nikkei can sustain these gains, it will break an eight-day losing streak, signaling a potential shift in market sentiment.
Amidst the market rally, automaker Mitsubishi Motors stood out as one of the top gainers in the Nikkei index, with a rise of over 6%. Reports emerged that the company is set to join the Honda-Nissan alliance to standardize in-vehicle software, a move that could consolidate the domestic market into two major forces: the Toyota Motor Group and the Honda-Nissan-Mitsubishi alliance. However, not all Japanese companies fared well, as drugmaker Eisai’s shares plummeted by 13% after the European Union’s regulator rejected its Leqembi treatment for Alzheimer’s disease. This setback made Eisai the biggest laggard among the 10 Nikkei 225 stocks that declined despite the overall market rally.
Looking ahead, investors in the region are eyeing several key events this week, including the Bank of Japan’s monetary policy meeting scheduled to start on July 30. A Reuters poll of economists anticipates a potential 10 basis point rate hike by the central bank. Some analysts from ING even suggested a 15 basis point rate increase alongside a reduction in the bond-buying program, citing the economy’s return to a recovery path following an unexpected contraction in the first quarter of 2024. Additionally, China’s July PMI data and Australia’s upcoming inflation figures are among the essential economic indicators to watch before their respective central bank meetings.
In Monday’s trading session, South Korea’s Kospi index rose by 1.3%, while the small-cap Kosdaq gained 0.59%. The Hang Seng index in Hong Kong climbed by 1.1%, while mainland China’s CSI 300 slipped by 0.3%, dragged down by weakness in utility stocks. Australia’s S&P/ASX 200 index recorded a gain of 0.84%. The Taiwan Weighted Index rebounded by 1.04% after experiencing a sharp decline of over 3% on the previous Friday, which was exacerbated by trading halts due to a typhoon.
On the preceding Friday in the U.S., major indexes witnessed a significant uptick, 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%. This positive momentum in the U.S. markets likely contributed to the optimistic start for Asian markets on Monday, as investors remain attentive to global economic developments and central bank policies.
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