Monday, July 15, 2024

Asian Stocks Rise as Tech Sector Pushes US Markets Up: Summary of Market Activity

Asian Equities Advance on Tech Stock Rally Ahead of US Inflation Data

Asian Equities Surge on Tech Stock Rally and Record Sales Growth

Asian equities saw a significant surge in value following a rally in the world’s largest tech stocks that also lifted global shares to new highs. Equities in Japan, Australia, and China all rose, spurred by a bullish pulse on Wall Street the previous day. The positive momentum was further reinforced by gains in the Australian and New Zealand dollars, as well as most Asian currencies against the US dollar.

Taiwan Semiconductor Manufacturing Co. reached record levels after reporting its fastest sales growth since 2022. The company is the sole supplier of advanced chips to tech giants like Nvidia Corp. and Apple Inc. Other key players driving the regional stock index higher included Sony Group Corp., Tencent Holdings Ltd., and Korean chipmaker SK Hynix Inc., which hit its highest levels since 2000.

The S&P 500 and Nasdaq 100 indexes both gained over 1%, setting new records, with global equities also climbing. The surge was fueled by strong performances from Nvidia and Apple. Apple announced plans to increase its device shipments by 10% following a challenging 2023. The S&P 500 has now seen gains for seven consecutive sessions, marking its longest winning streak since November.

Mark Hackett from Nationwide commented on the current market environment, noting that despite a deluge of data this week, including Federal Reserve Chair Powell’s testimony and CPI/PPI reports, markets remain remarkably calm.

Looking ahead, investors are eagerly awaiting the release of the core consumer price index (CPI) data for June, which excludes food and energy costs and is a key indicator of underlying inflation. The expected rise of 0.2% in June would mark the smallest back-to-back gains since August, which could be reassuring for Fed officials.

According to Anna Wong at Bloomberg Economics, the positive CPI report could boost the Federal Open Market Committee’s confidence in the inflation trajectory, potentially setting the stage for Fed rate cuts starting in September.

In other news, the China Securities Regulatory Commission announced tighter regulations on short selling and high-frequency trades to combat improper arbitrage and maintain market stability. The sentiment toward Chinese stocks has also soured ahead of the country’s upcoming Third Plenum.

As the focus shifts to Wall Street’s anticipation of the consumer price index, Federal Reserve Chair Jerome Powell emphasized that the Fed does not require inflation to fall below 2% before considering rate cuts. Powell highlighted a significant cooling in the labor market and underscored the need for further action on the balance sheet runoff.

Krishna Guha from Evercore ISI interpreted Powell’s testimony as signaling a shift in the Fed’s risk assessment, potentially paving the way for a rate cut in September. Meanwhile, Bank of England Chief Economist Huw Pill’s comments stirred speculation about the timing of a rate cut.

Looking ahead, economic reports in Asia will include consumer confidence data from Thailand and a monetary policy decision in Malaysia, with possible money supply and lending figures from China also expected.

In the commodities market, oil prices rose for a second consecutive day on signs of increasing demand and a positive sentiment across broader markets. Gold also saw gains for a third straight day.

The outlook for global markets remains optimistic, with key events on the horizon including US CPI data and a series of earnings reports from major financial institutions.

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