Asian stocks edge up as markets digest oil rally

Despite a spike in oil prices, investors remained cautious about a potential rise in inflation over the upcoming months as the majority of Asian equities edged up on Monday as risk appetite maintained in response to softer-than-expected U.S. inflation data from the previous week.

After Beijing launched an investigation into local sales of American memory chip manufacturer Micron Technology Inc., China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes increased by 0.9% and 0.6%, respectively. These gains were primarily driven by shares of major electronics manufacturers.

Any hiccups in Micron’s Chinese sales allow local competitors to enter the market, despite the fact that China’s inquiry suggests that trade relations between Beijing and Washington are getting worse. Semiconductor Manufacturing International Corp. and SG Micro Corp., two significant Chinese chipmakers, had their shares rise by more than 2% apiece on Monday.

The most significant decline in Hong Kong’s Hang Seng index was seen in local technology firms, the majority of which also have U.S. listings.

Broader Asian markets rose as softer-than-expected personal consumption expenditures data from the previous week raised chances that inflation was receding, necessitating less aggressive Federal Reserve actions.

The Nikkei 225 index of Japan increased 0.5%, while the Nifty 50 and BSE Sensex 30 indices of India both increased by 0.2%.

Nevertheless, an increase in oil prices on Monday following an unexpected reduction in production by the Organization of Petroleum Exporting Countries and allies (OPEC+) sparked some worries about a possible revival in inflation, particularly if gasoline costs stay high.

Major central banks, especially the Fed, could adopt more monetary tightening measures as a result of this.

Gains in Asian markets on Monday were constrained by this idea. A number of central bank meetings and economic indicators are also in the spotlight this week. Interest rate decisions are expected from the Australian and Indian central banks this week, while more hints about the direction of US monetary policy are anticipated from the nonfarm payrolls statistics.