Asian Stocks Rise as Markets Cheer Chinese Stimulus and Tech Advances

Most Asian stocks climbed on Monday, buoyed by stimulus measures from China and a robust performance in tech-heavy indexes as investors positioned themselves ahead of key earnings reports this week.

Wall Street Influence and Fed Expectations

Regional markets largely built on gains from last week, driven by softer U.S. inflation readings that heightened expectations for Federal Reserve interest rate cuts this year. Wall Street reached record highs last week, and U.S. stock index futures extended their gains in Asian trading on Monday.

Investors are also focused on upcoming signals from the minutes of the Fed’s late-April meeting and several speeches from Fed officials scheduled this week.

Chinese Markets Reach 2024 Highs Amid Stimulus

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.2% and 0.3%, respectively, on Monday, extending their previous week’s gains. Both indexes hit seven and eight-month highs, bolstered by Beijing’s recent stimulus measures aimed at invigorating the economy, particularly the sluggish property market.

In a series of moves last week, China eased home buying restrictions in several major cities and instructed state governments to purchase homes. These measures were part of broader efforts to support the economy, which included maintaining the benchmark loan prime rate at record lows on Monday.

However, gains in Chinese markets were tempered by mixed economic data for April. While industrial production showed signs of recovery, retail spending and capital investment remained weak, indicating that further stimulus measures might be necessary.

Additionally, fears of renewed trade tensions with the United States weighed on sentiment after Beijing restricted some U.S. firms from engaging in import and export activities related to China. This action was perceived as retaliation against recent U.S. tariff increases on critical Chinese industries.

Tech Sector Leads with Nvidia Earnings Anticipation

Tech-heavy indexes outperformed on Monday, with Japan’s Nikkei 225 up 1.3%, South Korea’s KOSPI gaining 0.6%, and Hong Kong’s Hang Seng advancing 0.4%. Investors flocked to the tech sector ahead of NVIDIA Corporation’s (NASDAQ:NVDA) quarterly earnings report on Wednesday, seeking insights into the sustained demand for AI technologies.

Nvidia, a prominent player in the AI industry, is considered a bellwether for tech sector performance. The company’s significant involvement in AI has driven a surge in tech valuations over the past year.

Tech stocks also benefited from last week’s optimism about declining U.S. interest rates, which helped push down Treasury yields and enhance the appeal of growth stocks.

Broader Asian Market Performance

Beyond tech, broader Asian markets also saw gains. Australia’s ASX 200 rose 0.6%, driven by a rally in copper and other metal prices that bolstered mining stocks. Thailand’s SET Index edged up 0.2% after GDP data revealed stronger-than-expected economic growth in the first quarter.

Asian markets are riding a wave of optimism fueled by Chinese economic support measures and anticipated strength in the tech sector, particularly ahead of Nvidia’s earnings. However, mixed economic signals from China and potential geopolitical tensions could pose challenges to sustained gains. Investors will closely monitor U.S. economic indicators and Federal Reserve communications for further guidance on the global economic outlook and interest rate trajectories.