Most Asian stocks rose sharply on Monday with focus on the upcoming Federal Reserve meeting for further signals on interest rate cuts, with the battered technology sector leading the gains.
But Chinese markets continued to lag their regional peers, with sentiment toward the country showing little sign of improvement ahead of more key economic readings this week.
Regional stocks took positive cues from a strong finish on Wall Street on Friday, as signs of easing inflation increased bets that the Federal Reserve will eventually cut interest rates this year. U.S. stock index futures also rose in Asian trading on the idea.
The Federal Reserve is set to wrap up its two-day policy meeting on Wednesday, but any signals on when it will begin cutting interest rates will be closely watched, especially amid encouraging comments from Fed officials.
Asian technology continues to boom
Technology-heavy Asian stocks continued to advance amid an extended rally in tech stocks. Japan’s index rose 2.2%, while South Korea and Hong Kong rose about 1% each.
Technology stocks saw some cheap buying after being hit hard by profit-taking over the past two weeks, while expectations of interest rate cuts also prompted investors to shift to more economically sensitive sectors.
But investors are back in the sector, especially ahead of several key earnings reports this week. U.S. tech giants Microsoft (NASDAQ:), Apple (NASDAQ:) and Meta Platforms (NASDAQ:) are set to report second-quarter earnings in the coming days, providing more clues about the industry and artificial intelligence.
Chinese stocks fall amid few positive signs
Chinese and U.S. stock indexes fell 0.4% and 0.1% respectively, remaining near five-month lows, with little relief from negative sentiment toward China.
Concerns about a slowdown in China’s economic recovery – after a series of weak readings in July – sparked a broad sell-off in Chinese markets.
Political uncertainty in the US has also affected Chinese markets, especially as investors are uncertain about how the next US administration will deal with Beijing.
This week focuses on the country’s data for July, for more clues about business activity.
Broader Asian markets were higher, with Australia’s index up 0.8%, while Japan’s index rose 1.9%.
The Indian stock market index pointed to a positive opening, with the index set to extend gains after hitting record highs last week.