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Most Asian markets advanced on Monday as technology shares rebounded from last week’s steep sell-off, although caution prevailed with investors eyeing upcoming central bank meetings in Australia and India.
Japanese equities underperformed as a stronger yen weighed on exporters, while Indian stocks continued to digest sharp declines from the prior week. Regional sentiment tracked Wall Street’s modest Friday strength, with in-line U.S. inflation data bolstering expectations of more Federal Reserve rate cuts, though fears of a looming U.S. government shutdown and fresh tariff threats capped enthusiasm.
Australia: RBA in Focus
The ASX 200 climbed 0.8%, led by banks and gold miners, ahead of the Reserve Bank of Australia’s Tuesday decision. While the RBA is widely expected to hold rates steady amid sticky inflation, investors are positioning for a potential cut in November.
- ANZ analysts forecast a 25 basis point cut in November, bringing the policy rate to 3.35%, with Governor Michele Bullock expected to emphasize a data-dependent path after 75 bps of easing in 2025.
- Recent inflation surprises have complicated expectations, but the central bank remains focused on curbing price pressures.
Tech Leads Recovery Across Asia
- South Korea’s KOSPI surged 1.1%, with SK Hynix up 3.7%, bouncing from last week’s semiconductor-led losses.
- Hong Kong’s Hang Seng jumped 1.5%, supported by gains in BYD (+1.5%), after reports the EV giant aims for exports to account for 20% of sales in 2025.
- China’s CSI 300 rose 0.6%, and the Shanghai Composite edged up 0.1%, amid cautious optimism on potential stimulus support from Beijing.
A pullback in U.S. Treasury yields also underpinned risk appetite, with Friday’s PCE inflation data aligning with forecasts, reinforcing the Fed’s case for further gradual cuts.
Japan and India Lag
- Japan’s Nikkei dipped, as yen strength pressured exporters and weak PMI readings weighed on sentiment.
- India’s markets were subdued, still nursing heavy losses from last week, as traders awaited the Reserve Bank of India’s policy decision later this week.
