Asian Stocks Rise Ahead of Inflation Reports; China Lags

Most Asian stock markets experienced gains on Monday, continuing the upward trend seen last week, as investors grew optimistic that fears of a U.S. recession may be overstated. This week, attention is heavily focused on important inflation data.

Chinese markets, however, underperformed compared to their regional counterparts, having largely missed last week’s rally due to ongoing worries about an economic slowdown in the nation. Additionally, several key earnings reports for the June quarter are expected this week.

Trading volumes in Asia were lower due to a market holiday in Japan, though stocks still managed to rise overall.

Regional markets drew positive momentum from a strong close on Wall Street last Friday, where U.S. stock indices recovered all of their previous week’s losses. Despite this, U.S. stock index futures saw a slight decline during Asian trading hours.

This week, the primary focus will be on U.S. consumer price index data, which is set to be released on Wednesday. Investors are keen to find clues regarding when the Federal Reserve might start reducing interest rates, with opinions divided on whether to expect a 25 or 50 basis point cut in September.

Among Asian markets, South Korea stood out as the top performer, gaining 0.9% driven by a surge in technology stocks. Australia’s market also saw an increase of 0.5%, while most Southeast Asian markets posted modest gains.

In China, major indices remained in a narrow trading range, with Hong Kong’s index declining by 0.2%. Sentiment surrounding the Chinese market remained subdued amid ongoing concerns about a sluggish economic recovery, exacerbated by a series of disappointing economic data for July. Though recent inflation figures showed some improvement, uncertainty remains about whether the disinflationary trend is reversing.

Investors are particularly focused on upcoming earnings reports from some of China’s largest internet companies, including Tencent Holdings, Alibaba Group, and JD.com, all of which are scheduled to release their June quarter results this week.

In India, market sentiment pointed toward a sluggish opening due to new allegations against the country’s securities regulator made by short seller Hindenburg Research. The firm claimed that the head of the Securities and Exchange Board of India had invested in offshore funds associated with the Adani Group. This follows last year’s allegations of fraud and share price manipulation leveled by Hindenburg against the Adani conglomerate.

The Securities and Exchange Board of India responded with an advisory on Sunday, urging investors to remain calm in light of these reports. The Nifty and Sensex indices are currently near record highs following a strong rally throughout much of 2024, but this has made Indian stocks more susceptible to volatility and profit-taking.

Additionally, economic data from India is expected to be released on Monday, which is anticipated to show a decline in price pressures.