Asian Stocks Surge on China Stimulus and Tech Strength

By Daniel M.

May 20, 2024   •   Fact checked by Dumb Little Man

Most Asian stocks rose Monday as markets welcomed China’s stimulus efforts. Technology-heavy indexes also rose as investors piled into the sector ahead of important earnings this week.

Regional Gains Bolstered by U.S. Market Optimism

Most regional markets sustained their gains from the previous week. Soft inflation numbers in the United States have spurred speculation that the Federal Reserve would lower interest rates this year. 

Wall Street set new records last week, and U.S. stock index futures rose further in Asian trade on Monday. This week’s focus includes more cues from the Fed’s late-April meeting minutes, as well as addresses by numerous Fed officials.

Chinese Stocks Peak Amid Stimulus Measures

On Monday, China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.2% and 0.3%, respectively, building on gains from the previous week. Both indexes set seven- and eight-month highs.

Last week, Beijing announced economic stimulus measures, focusing on the real estate sector. These efforts included easing home-buying limits in big cities and directing state governments to buy houses. On Monday, China’s benchmark loan prime rate remained at a record low.

However, Chinese market advances were hampered by mediocre economic data for April. Retail expenditure and capital investment remained poor, signaling that Beijing needs to implement additional stimulus measures. 

Fears of a fresh trade war with Washington also weighed on the market as Beijing prohibited several US corporations from engaging in China-related import and export activity.

Tech Advances Ahead of Nvidia Earnings

The tech-heavy indexes performed strongly on Monday. Japan’s Nikkei 225 jumped 1.3%, while South Korea’s KOSPI and Hong Kong’s Hang Seng rose 0.6% and 0.4%, respectively.

Investors got into the tech sector ahead of NVIDIA Corporation’s (NASDAQ: NVDA) quarterly earnings, which are due this Wednesday. 

NVIDIA is regarded as a forerunner in the tech business, particularly considering its rising exposure to the AI industry. The company led an AI-driven increase in valuations across the technology sector.

Tech stocks also gained from last week’s optimism about falling interest rates in the United States, which pushed down Treasury yields.

Broader Asian Markets Also Advance

The ASX 200 in Australia climbed 0.6%, boosted by strength in mining equities as copper and other metal prices rallied. Thailand’s SET Index rose by 0.2% after GDP figures showed that the economy expanded faster than predicted in the first quarter.

Asian stocks rose after US stock indexes approached new highs, with the Dow Jones Industrial Average closing above 40,000 for the first time. U.S. futures and oil prices both surged as investors focused on Middle Eastern developments.

China’s Central Bank Actions

China’s market extended last week’s gains as the central bank announced further support for the real estate industry, including lower down payments and mortgage interest rates. The Shanghai Composite index gained 0.6% to 3,172.35.

On Monday, China’s central bank maintained the one-year and five-year loan prime rates at 3.45% and 3.95%, respectively. These rates act as benchmarks for the majority of new and outstanding loans in China, influencing the cost of property mortgages.

Wall Street’s Impact on Asian Markets

On Friday, the Dow increased by 0.3% to 40,003.59. The S&P 500 gained 0.1% to 5,303.27, falling just 0.1% short of its record. The Nasdaq composite declined 0.1% to 16,685.97. 

Treasury yields increased, with the 10-year Treasury yield climbing to 4.41% from 4.38%.

Oil and Currency Markets

In other transactions on Monday, benchmark US crude oil increased 30 cents to $79.88 per barrel. Brent crude gained 33 cents to $84.31 per barrel.

The US dollar jumped to 155.75 Japanese yen from 155.55 yen. The euro has risen to $1.0882 from $1.0871.

Final Thoughts

The rise in Asian markets reflects investors’ optimism in the wake of China’s stimulus measures and good performance in the technology sector. However, current economic issues and geopolitical tensions may have an impact on future market developments. 

Traders should remain vigilant and constantly follow movements in global economic policies and business results.

Daniel M.

Daniel Moore is a seasoned trading analyst with over 20 years of experience navigating the ever-evolving financial landscape. Renowned for his unconventional yet effective approach, Daniel utilizes a blend of technical and fundamental analysis to identify hidden gems and craft winning trade strategies. He is a master at demystifying complex market data and translating it into actionable insights for traders of all experience levels.

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