The gains helped claw back some of the hefty losses suffered last week after disappointing results from tech giants Tesla and Alphabet caused panic-selling among investors who had piled into the sector this year
Asian markets rallied Monday, tracking a surge on Wall Street after data showing US inflation slowed further in June stoked hopes the Fed will cut interest rates.
The upbeat mood comes at the beginning of a busy week for traders, with the central banks of the US and Japan making policy decisions, a key US jobs report due on Friday and megacaps releasing their earnings.
The gains helped claw back some of the hefty losses suffered last week after disappointing results from tech giants Tesla and Alphabet caused panic-selling among investors who had piled into the sector this year.
All three main indexes in New York climbed more than 1% Friday after the Federal Reserve’s preferred measure of inflation, the PCE index, slowed to 2.5% last month.
The reading, which was just above officials’ 2% target, was the latest to boost bets on a rate cut in September and pushed up expectations for two more before January.
Fed chief Jerome Powell sparked a rally in markets this month when he said decision-makers did not need to see the reading hit 2% before moving.
The bank is due to make an announcement Wednesday, ahead of the release of the closely watched non-farm payrolls report Friday.
Incoming data ahead of the July Fed policy meeting could not have been better: consumption rebounded in June after a weak start into the second quarter, according to Christian Scherrmann at DWS.
Lower-than-expected gains in inflation for the same month pleased both consumers and central bankers. Meanwhile, it seems that labour markets remain on track towards a better balance, he said.
However, analyst Stephen Innes said there were still risks ahead.
It is a week to buckle up. A significant downside miss on the NFP could spell ‘bad news is bad news’ for stocks, he stated in his Dark Side Of The Boom newsletter.
While an upside beat might reduce the possibility of one of those Fed rate cuts baked into the 2024 cake. This could strengthen the US dollar and spoil everyone’s rate-cut party, he said.
Asian investors were in a buoyant mood at the beginning of the week.
Tokyo rose more than 2% after eight days of losses, while Hong Kong added more than 1%.
Sydney, Seoul, Singapore and Taipei were also up, while Shanghai was flat.
London, Paris and Frankfurt gained at the open.
Mumbai, Manila and Wellington dropped.
