Asian stocks extended their upward trajectory on Friday, wrapping up a positive week driven by signs of moderating U.S. inflation. Investors now shift their attention to upcoming data that will provide further insights into the Chinese economy.
The gains in Chinese stocks were somewhat restrained as market participants eagerly anticipated crucial second-quarter gross domestic product figures from the nation, scheduled for release in the coming week. Despite central bank officials discussing potential stimulus measures, the impact on the markets remained minimal.
Regional stocks drew encouragement from the overnight rally on Wall Street, fueled by data revealing a slowdown in producer prices and pointing to easing inflation in the world’s largest economy. Consequently, investors increasingly speculated that the Federal Reserve might be nearing the peak of its interest rate cycle, leading to significant gains in technology stocks.
This positive trend spilled over into Asian markets, with technology-heavy indexes recording the most substantial advances. Hong Kong’s Hang Seng index climbed 0.6%, while the Taiwan Weighted index and South Korea’s KOSPI surged by 1% and 1.2%, respectively.
Asian stocks deliver impressive weekly gains
Most regional indexes achieved their best weekly performance of the year so far, as concerns over rising U.S. interest rates diminished, prompting traders to flock back to riskier assets.
Hong Kong’s Hang Seng index stood out as the top performer for the week, surging nearly 6%. This remarkable performance was attributed to heavyweights in the technology sector, benefiting from expectations that the Chinese government would ease regulatory scrutiny on major internet firms.
Taiwan and South Korean markets also experienced notable gains, with their respective bourses rising by 3.3% and 3.8%. Additionally, a rise in commodity stocks propelled Australia’s ASX 200 to soar by 3.6%.
On Friday, Australia’s ASX 200 climbed an additional 0.6% after the appointment of Deputy Reserve Bank Governor Michele Bullock as the new central bank governor.
In contrast, Japan’s Nikkei 225 recorded relatively modest gains this week. Weak economic indicators prompted investors to secure profits after reaching 33-year highs. The index inched up by 0.4% on Friday, concluding the week with a 0.5% increase.
India’s Nifty 50 and BSE Sensex 30 indexes displayed limited gains for the week, with respective increases of 0.4% and 1.3%. However, both indexes reached record highs during the week, reflecting growing optimism about the Indian economy.
Chinese shares lag amid economic uncertainty, anticipation builds for GDP release
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes lagged behind their regional counterparts, edging up by around 0.1% each. They were also poised for a subdued weekly performance.
Several weak economic indicators in recent weeks have hinted at a slower post-COVID economic recovery in China. According to a Reuters poll, the economy is expected to have grown by a mere 0.5% in the second quarter.
Furthermore, market participants eagerly await a decision on China’s key Loan Prime Rate, which is scheduled for the following week. The People’s Bank of China had cut the rate for the first time in eight months in June, offering limited relief to Chinese stocks that have struggled to remain positive for the year.