TOKYO (Agencies): In a welcome start to the week, Asian markets surged as investors speculated that the Federal Reserve may pause its rate hikes while pinning hopes on Beijing’s policy stimulus measures to stabilize China’s economic landscape.
A holiday in the United States led to thin trading volumes, with key economic readings from the US and China on the horizon, including data on services, trade, and inflation.
Investor sentiment in China received a boost as embattled property developer Country Garden secured approval from its creditors to extend payments for an onshore private bond. This development was met with a positive market response, with Chinese blue-chip stocks rising by an additional 1.3% atop the previous week’s 2.2% gain.
Japanese markets see positive momentum
Japan’s Nikkei index rose by 0.5%, continuing last week’s impressive 3.4% rally, while the broader Topix index reached its highest level in 33 years. The surge was supported by data indicating that Japanese companies had achieved record profits during the June quarter.
However, despite these gains, the Topix’s price-to-earnings ratio remains notably lower compared to US counterparts.
Investor sentiment in the tech sector faces a critical test this week with the impending initial public offering of chip giant Arm Holdings. The company aims for a valuation in the range of $50 billion to $54 billion, with a share price range of $47 to $51.
This development will shed light on the market’s appetite for tech investments.
Market sentiment leaned toward optimism following a benign August US payrolls report. Although the headline jobs number exceeded expectations, downward revisions to the previous two months’ data and a dip in wage growth pointed to a labor market showing signs of loosening.
Gold shines as rate hike fears recede
As the prospect of a US rate hike diminished, gold prices stood at $1,944 an ounce, benefitting from reduced risk in the market. The easing of rate hike expectations added to the appeal of the precious metal.
Oil prices near 7-month highs
Oil prices remained near seven-month highs due to tightening supply, driven by expectations that Saudi Arabia would extend a voluntary 1 million barrel per day oil production cut into October. Brent crude held steady at $88.56 a barrel, while US crude inched up to $85.64 per barrel.
As central banks in Canada and Australia prepare for their meetings this week, market attention will be keenly focused on their decisions regarding interest rates. Additionally, the head of the European Central Bank, Christine Lagarde, is set to speak later today, with market expectations leaning against a rate hike at the ECB’s September meeting following recent soft economic data.
The US dollar continued to show strength against the yen, bolstered by the relative outperformance of the US economy. Investors closely monitored the currency market for any signs of change in this dynamic.
In a world of shifting economic data and evolving policy decisions, the financial markets navigate a complex landscape filled with both optimism and uncertainty.