Shares in Asia experienced mostly positive movements on Monday, following a rebound on Wall Street that halted a three-day losing streak and reduced previous losses from the preceding week. Investors remain attentive to upcoming economic data, particularly from China, with factory data set to be released on Tuesday and a quarterly business sentiment survey from the Bank of Japan expected on Wednesday.
The looming possibility of a shutdown of the U.S. government is drawing attention, as the deadline is established for this week. Historically, such political impasses have had limited effects on market performance. Additionally, U.S. jobs data are scheduled to be released, contributing to the current market sentiment.
In early trading, U.S. futures showed a slight increase, while oil prices experienced a decline. The Nikkei index in Tokyo was the only major index to drop, falling by 1% to 44,892.52. Conversely, Chinese markets displayed gains, with the Hang Seng index in Hong Kong rising by 1.5% to 26,518.03, and the Shanghai Composite index gaining 0.1% to 3,832.65. Australia’s S&P/ASX 200 increased by 0.7% to 8,545.70, while South Korea's Kospi surged by 1.3% to 3,430.57.
On Friday, U.S. stock indices managed to cut their losses for the week. The S&P 500 rose by 0.6% to 6,643.70, while the Dow Jones Industrial Average climbed by 0.7% to 46,247.29. The Nasdaq composite also added 0.4%, closing at 22,484.07. These movements brought all three indexes closer to the all-time highs they achieved earlier in the week.
The recent stock market rally received support from a report indicating that U.S. inflation rose to 2.7% last month, up from 2.6% in July, according to the Federal Reserve's preferred measure of prices. While this figure exceeds the Fed's 2% target, it aligns with economists' forecasts and provided some optimism regarding potential interest rate cuts to stimulate the economy.
The Federal Reserve had implemented its first rate cut of the year the previous week, but has refrained from guaranteeing further reductions due to potential inflationary risks. Consumer sentiment also remained a focal point, with a report from the University of Michigan revealing that consumer sentiment was lower than anticipated, primarily due to concerns over high prices. Despite this, consumer expectations for inflation over the next twelve months decreased slightly to 4.7% from 4.8%.
Another element contributing to inflationary pressure is President Donald Trump's recently announced tariffs on a range of imports, which were disclosed late Thursday. These new tariffs, affecting various goods such as pharmaceutical drugs, kitchen cabinets, and upholstered furniture, will go into effect on October 1. While specific details surrounding these tariffs remain sparse, analysts expressed uncertainty regarding their overall effects on the economy and markets. Nonetheless, the announcement led to moderate movements in the U.S. stock market.
Notably, companies such as Paccar, known for its dominant truck brands Peterbilt and Kenworth, surged by 5.2%. Major U.S. pharmaceutical companies also saw slight increases, with Eli Lilly rising by 1.4% and Pfizer gaining 0.7%. In early Monday trading, U.S. benchmark crude oil prices saw a decline of 49 cents, trading at $65.23 per barrel, while Brent crude dropped by 42 cents to $68.80 per barrel. The prospect of OPEC countries potentially increasing their production limits next month has contributed to concerns over oversupply in the oil market.
The U.S. dollar weakened against the Japanese yen, falling to 148.93 from 149.51, while the euro strengthened, rising to $1.1727 from $1.1703. These currency movements reflect ongoing shifts in investor sentiment and market reactions to global economic conditions.
