Asian Stocks Rebound, but U.S. Inflation Data Looms Large

Asian stock markets staged a comeback on Monday, recovering some lost ground from the previous week. This upswing was fueled by a strong finish on Wall Street last Friday, particularly driven by gains in technology stocks that propelled the NASDAQ Composite to a record-high close.

However, the anticipation of crucial U.S. inflation and interest rate data later in the week tempered the enthusiasm, keeping gains in check.

China Shows Steady Growth, but Stimulus Doubts Linger

Chinese markets experienced a modest rise, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both inching up by about 0.1%. This recovery was supported by data revealing steady growth in Chinese industrial profits for April, signaling positive momentum in one of the country’s most significant sectors.

Despite this encouraging data, doubts persisted about the effectiveness of Beijing’s recent stimulus measures, particularly those aimed at the housing market. While the government has announced several supportive policies, analysts have raised concerns about their implementation and funding.

Asian Markets Cautiously Optimistic Ahead of PCE Data

Gains across most Asian markets remained limited as investors awaited the release of the U.S. personal consumption expenditure (PCE) price index data this Friday. This crucial inflation gauge is expected to influence the Federal Reserve’s interest rate decisions, making it a focal point for market watchers.

The fading expectations of U.S. interest rate cuts, which weighed heavily on Asian stocks last week, continued to be a significant factor. Traders have largely discounted the possibility of a rate cut in September.

Key Regional Markets and Data

• Japan: The Nikkei 225 and TOPIX index both rose 0.3%, with investors keeping a close eye on upcoming inflation, retail sales, and industrial production data.
• South Korea: The KOSPI gained 0.7%, buoyed by gains in technology stocks, particularly memory chip maker SK Hynix, which surged to a record high amid the ongoing AI hype.
• Australia: The ASX 200 rebounded from last week’s losses, rising 0.7%.
• India: Futures for the Nifty 50 index indicated a positive open, with the index still within reach of recent record highs.