Equities in Asia experienced a boost on Monday, following a rally on Wall Street, as investors reacted positively to signs of easing inflation. Chinese stock gauges led the gains, with expectations of more government stimulus. Japanese and Korean shares also rose, pushing a regional index towards its highest closing level of the year. The MSCI Emerging Markets Index also rose by as much as 1%, reaching levels not seen since June of the previous year. However, US equity futures and contracts on European stocks fell in Asia, despite a rally on Friday that saw the Nasdaq 100 rise by almost 2%.
The demand for risk assets comes after further easing in key US inflation gauges, which has sparked fresh optimism that a soft landing for the world’s largest economy is within reach. Federal Reserve Bank of Minneapolis President Neel Kashkari described the inflation outlook as “quite positive,” despite the potential for job losses and slower growth.
The Bank of Japan (BOJ) announced unscheduled bond-purchase operations to buy debt, in an attempt to contain a selloff after it revealed on Friday that it would allow yields to rise above a 0.5% cap. The yen swung to a loss against the dollar as a result. Joey Chew, head of Asia FX research for HSBC, suggested that the BOJ’s move could be a small step towards the end of its yield curve control policy, known as YCC. However, he believes that any significant changes to YCC are more likely to occur next year.
Chinese stocks rose on Monday, extending last
What were the main factors that contributed to the boost in equities in Asia on Monday?
Equities in Asia received a boost on Monday, thanks to a rally on Wall Street and positive signs of easing inflation. Chinese stock gauges led the gains, buoyed by expectations of increased government stimulus. Japanese and Korean shares also saw gains, pushing a regional index towards its highest closing level this year. The MSCI Emerging Markets Index also rose by as much as 1%, reaching its highest level since June of the previous year. However, US equity futures and contracts on European stocks fell in Asia, despite a strong rally on Friday that saw the Nasdaq 100 rise by almost 2%.
Investors’ demand for risk assets comes as key US inflation gauges show further easing, sparking optimism that the world’s largest economy may experience a soft landing. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, described the inflation outlook as “quite positive,” despite potential job losses and slower economic growth.
In response to a selloff, the Bank of Japan (BOJ) announced unscheduled bond-purchase operations to buy debt, after revealing on Friday that it would allow yields to rise above a 0.5% cap. As a result, the yen weakened against the dollar. Joey Chew, head of Asia FX research for HSBC, suggested that the BOJ’s move could be a small step towards the end of its yield curve control policy, known as YCC. However, he believes that any significant changes to YCC are more likely to occur next year.
Chinese stocks continued to rise on Monday, building upon previous gains.
