Asian Stocks Rally After U.S. Market Gains
Asian share markets began the week on a positive note, reflecting optimism from a Friday rally on Wall Street. The S&P 500 closed 1.1% higher at 5,930.85, capping a difficult week with a strong recovery, although it ended the week down 2%. The Dow Jones Industrial Average rose 1.2% to 42,840.26, while the Nasdaq composite gained 1% to 19,572.60. These gains were led by Big Tech companies like Nvidia after inflation data showed a slight decrease, raising hopes of easing price pressures.
However, broader concerns remain. The Federal Reserve hinted at fewer interest rate cuts next year, causing uncertainty in the Asian share market. While traders had expected multiple rate reductions through 2025, the central bank’s cautious outlook tempered expectations, leading to volatility earlier in the week.
Strong Performances Across Asian Markets
Asian indices showed mixed but mostly positive results. Tokyo’s Nikkei 225 jumped 0.9% to 39,039.18, buoyed by a stronger dollar, which was trading at 156.53 yen. Reports of a potential merger between Honda Motor Co. and Nissan Motor Corp. dominated headlines. Honda shares edged up 0.8%, while Nissan’s fell 0.9% after last week’s rally.
Elsewhere, Hong Kong’s Hang Seng climbed 0.7% to 19,857.98, and the Shanghai Composite index rose 0.2%. South Korea’s Kospi posted an impressive 1.5% gain to 2,440.62, fueled by a 3.9% rise in shares of chipmaking giant TSMC. Similarly, Taiwan’s Taiex surged 2.5%, with Hon Hai Precision Industry gaining 3.8% amid reports of its interest in acquiring a significant stake in Nissan. Bangkok’s SET index edged up slightly by 0.1%.
Global Markets Eye Economic Trends and Policy Shifts
The U.S. narrowly avoided a government shutdown with a budget deal finalized over the weekend, providing some relief to investors. On the commodities front, oil prices edged higher in early trading Monday. U.S. benchmark crude gained 40 cents to $69.86 per barrel, while Brent crude rose 36 cents to $73.30.
Currency markets saw the euro strengthen to $1.0441 against the dollar, slightly up from $1.0433. Meanwhile, concerns linger over the Fed’s ability to combat inflation. Although inflation has eased from its peak above 9%, it remains above the Fed’s 2% target. Critics warn that high stock valuations, combined with uncertainty around rate cuts, leave markets vulnerable to setbacks.
The week ahead will likely see continued focus on global economic trends and geopolitical developments, with the Asian share market closely watching inflation data and central bank announcements for further clues on market direction.
