Chinese shares lead Asia higher, Nvidia in focus

South Korean stocks rose 1.1%, Australia’s index added 0.2%, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5%, while Chinese blue chips gained 1.4%

Chinese shares led Asia higher on Monday as investors gave a cautious welcome to the likely resumption of U.S. interest rate cuts, while hoping AI company Nvidia’s results this week will help justify the sector’s high valuations.

U.S. Fed Chair Jerome Powell’s dovish change of course has seen futures price in an 84% probability of a quarter-point rate cut in September, and at least 100 bps of easing to 3.25-3.5% by the middle of next year.

The shift pushed Treasury yields and the dollar down, flattering the outlook for corporate earnings, though it also implies policymakers now see increased possibility of a downturn in employment and the economy.

The news reinforces our view that the Fed will ease in response to softening labour demand and that risk to our forecast for a material downshift in global growth this quarter is skewed to the upside, said Bruce Kasman, global head of economic research at JPMorgan.

The market’s hopes will also be tested by a reading on U.S. personal consumption prices on Friday that is expected to show core inflation rising to its highest since late 2023 at 2.9%.

The report should reinforce the message that a rebound in service price inflation is combining with tariff-related pressures to push core inflation towards a 4% annualised rate, said Kasman.

Yields on 10-year notes held steady at 4.268%, having dropped 7 basis points on Friday.

For now, investors were content to follow Wall Street’s lead and Japan’s advanced 0.4%. South Korean stocks rose 1.1% and Australia’s index added 0.2%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5%. Chinese blue chips extended their recent rise with a gain of 1.4%, taking the index to its highest since mid-2022.

The Chinese index has jumped almost 10% so far this month on a liquidity-fuelled rally even as domestic demand has remained subdued and company pricing power almost non-existent.