Summary:
Asian stocks rose on Monday, continuing last week's rebound.
Chinese markets lagged due to economic slowdown concerns.
Focus on U.S. consumer price index data this week for clues on interest rate cuts.
South Korea performed best in Asia with a 0.9% increase.
Indian markets face uncertainty amid Hindenburg Research allegations.
Asian Markets Show Resilience
Most Asian stocks rose on Monday, continuing a rebound from last week amid increasing optimism that fears of a U.S. recession were overstated. The spotlight is now on a series of crucial inflation readings scheduled for this week.
China Lags Behind
Chinese markets are trailing their counterparts, having missed last week's rally due to ongoing concerns about an economic slowdown in the country. This week will also see the release of key June quarter earnings.
A market holiday in Japan contributed to softer trading volumes across Asia, yet regional markets still managed to post gains. Positive cues came from a strong close on Wall Street last Friday, where U.S. stock benchmarks wiped out all losses from the previous week. However, U.S. stock index futures dipped slightly during Asian trading hours.
Focus on Inflation
The primary focus this week is the U.S. consumer price index data, set to be released on Wednesday, which will provide insights into when the Federal Reserve might start reducing interest rates. Investors remain divided on whether a cut of 25 or 50 basis points will occur in September.
South Korea Leads the Pack
Among the Asian markets, South Korea emerged as the best performer, with a 0.9% increase driven by gains in technology stocks. Australia also saw a 0.5% rise, while most Southeast Asian markets experienced slight increases.
Concerns Over Chinese Stocks
Chinese indices remained relatively flat on Monday, with Hong Kong's index falling by 0.2%. Sentiment towards China remains cautious due to worries about a slowing economic recovery, especially after a series of weak economic indicators for July.
While recent inflation data showed some signs of improvement, it remains uncertain whether China's disinflationary trend is reversing. This week, earnings reports from major Chinese internet firms such as Tencent Holdings, Alibaba Group, and JD.com are highly anticipated.
Indian Markets Face Turbulence
India's market is expected to open softly due to new allegations against the Securities and Exchange Board of India (SEBI) from short seller Hindenburg Research. The firm claims that SEBI's head, Madhabi Puri Buch, invested in offshore funds associated with the Adani Group. This follows Hindenburg's previous allegations of fraud and share price manipulation against Adani.
SEBI has advised investors to remain calm ahead of any reports from Hindenburg. The Nifty and Sensex indices are hovering near record highs, following a strong rally throughout 2024, making them more susceptible to volatility and profit-taking. Additionally, inflation data from India is expected to show some easing of price pressures.
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