Asian Stocks Recover as Tech Rebounds; Chinese Shares Bounce Back from Six-Month Lows

Asian stocks rose on Friday, driven by a recovery in technology shares and month-end bargain buying, particularly in China, which helped to reverse some of the heavy losses seen earlier in August.

Tech Recovery and Positive Wall Street Cues Boost Asian Markets

The recovery in Asian markets followed a positive session on Wall Street, where the Dow Jones Industrial Average reached a record high, thanks to buying in economically sensitive stocks. While NVIDIA Corporation (NASDAQ:NVDA) had initially dragged down the S&P 500 and NASDAQ Composite with a middling outlook, the losses in the broader tech sector began to ease as Nvidia saw gains in aftermarket trading, along with U.S. stock index futures.

Focus on PCE Data and Rate Cut Expectations

Market participants are now focusing on the upcoming Personal Consumption Expenditures (PCE) price index data from the U.S., expected later on Friday. As the Federal Reserve’s preferred inflation gauge, the PCE data will likely influence expectations for interest rate cuts. Optimism over potential rate cuts has helped Asian markets recover some of their August losses, with traders increasingly confident that the Fed will move to lower rates in September.

Chinese Stocks Lead Recovery, But August Losses Persist

Chinese stocks showed a notable recovery on Friday, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rising by 1% and 0.5%, respectively. Despite this rebound, both indexes are still on track to lose between 3% and 4% for the month of August.

The recovery in Chinese markets was largely driven by month-end bargain hunting, as investors took advantage of the lower valuations following significant capital outflows throughout the month. However, despite Friday’s gains, Chinese markets remain among the worst performers in Asia for August.

Outlook

While the recent gains provide some relief, most regional markets are still grappling with the losses accumulated earlier in the month. The focus now shifts to U.S. economic data and its implications for global markets, particularly in terms of interest rate expectations. Asian markets may continue to see volatility as traders react to developments in the U.S. and adjust their positions accordingly.