Asia-Pacific markets rallied on Monday, with Japan’s Nikkei 225 leading the way in the region following a key U.S. inflation report released late last Friday that raised expectations for a potential interest rate cut. The U.S. personal consumption expenditures price index for June showed a 0.1% increase month-on-month and a 2.5% rise year-on-year, aligning with forecasts from economists surveyed by Dow Jones.
The Nikkei surged by 1.99%, while the broader Topix index also saw an uptick of 1.88%. This positive movement could break the Nikkei’s eight-day losing streak. The Japanese yen strengthened by 0.18% against the U.S. dollar, reaching 153.44.
Among the top gainers in the Nikkei index was automaker Mitsubishi Motors, which soared over 6% following a report by Nikkei Asia indicating that the company would be joining the Honda-Nissan alliance to standardize in-vehicle software.
Looking ahead in Asia, investors are anticipating the Bank of Japan’s monetary policy meeting scheduled to commence on July 30. According to a Reuters survey of economists, there is an expectation for the central bank to increase rates by 10 basis points to 0.1%.
Elsewhere in the region, South Korea’s Kospi index climbed by 1.2%, while Hong Kong’s Hang Seng index recorded a 1.14% gain, although mainland China’s Shanghai Composite experienced a 0.10% decline. Australia’s S&P/ASX 200 index was up by 0.83%.
Meanwhile, the Taiwan Weighted Index rebounded by 1.04% after a steep 3% decline on the previous Friday. The market in Taiwan had been closed last Wednesday and Thursday due to a typhoon.
In the U.S. on Friday, the Dow Jones Industrial Average surged by 1.64%, while the S&P 500 and the Nasdaq Composite also saw increases of 1.11% and 1.03%, respectively. These movements were attributed to a mix of oversold sentiment, a stronger-than-expected GDP report released on Thursday, and expectations that the Federal Reserve would initiate rate cuts, as stated by Sam Stovall from CFRA Research.
