Most Asian stocks advanced on Monday, continuing their rebound from last week as optimism grew that concerns over a U.S. recession might have been exaggerated. The focus this week is on a series of crucial inflation reports.
Chinese markets underperformed compared to their regional counterparts, largely missing out on last week’s rally due to ongoing worries about the country’s economic slowdown. Additionally, several significant June quarter earnings reports are expected this week.
With Japan observing a market holiday, trading volumes in Asia were lighter, though Nikkei 225 Futures still managed to climb.
The positive sentiment across regional markets was bolstered by a strong close on Wall Street last Friday, where U.S. stock indices recovered all of their losses from the previous week. However, U.S. stock index futures dipped slightly during Asian trading.
This week’s focus is mainly on the U.S. consumer price index data, scheduled for release on Wednesday, which could provide more clarity on when the Federal Reserve might start reducing interest rates. Investors are divided over the likelihood of a 25 or 50 basis point rate cut in September.
South Korea’s KOSPI led the gains in Asia, rising 0.9% driven by advances in technology stocks.
Australia’s ASX 200 climbed 0.5%, while most Southeast Asian markets saw modest gains.
Chinese stocks underperform, major earnings in focus
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes traded in a narrow range on Monday, while Hong Kong’s Hang Seng index slipped 0.2%.
Sentiment towards China remained subdued due to ongoing concerns about a slowing economic recovery, particularly after a series of weak economic indicators for July.
While recent inflation data indicated some improvement, it remains uncertain whether China’s disinflationary trend is reversing.
This week, attention is on earnings reports from some of China’s largest internet companies, including Tencent Holdings Ltd, Alibaba Group, and JD.com, all of which are set to release their June quarter results.
Indian markets anticipate a muted opening amid Hindenburg-SEBI conflict
Futures for India’s Nifty 50 index suggested a subdued opening on Monday, as sentiment in Indian markets was dampened by fresh allegations against India’s securities regulator from the short seller Hindenburg Research.
The firm accused Madhabi Puri Buch, the head of the Securities and Exchange Board of India (SEBI), of investing in offshore funds linked to the Adani Group. This follows Hindenburg’s short position against Adani last year, where it accused the Indian conglomerate of fraud and share price manipulation.
In response, SEBI issued an advisory on Sunday urging investors to remain calm and not react hastily to reports from Hindenburg.
The Nifty and BSE Sensex 30 were both near record highs following a strong rally through most of 2024, making Indian stocks more susceptible to volatility and profit-taking.
India’s CPI data is also expected on Monday, with forecasts suggesting a potential cooling of inflationary pressures.
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