Asian stocks rise on US gains ahead of key China policy meeting

HONG KONG, China  — Asian markets mostly rose Monday following US gains and ahead of a Chinese legislative session where Beijing’s annual growth target and other key policies will be announced.

Japan’s benchmark Nikkei 225 index surpassed the 40,000 mark for the first time, with analysts predicting it could advance even further, lifted by Wall Street rallies, robust corporate earnings and optimism over artificial intelligence.

READ: Japan’s Nikkei breaches 40,000 level as tech stocks soar

In New York, the S&P 500 and the tech-rich Nasdaq ended Friday at all-time highs off continued momentum for AI-linked equities, especially chip-maker Nvidia, which finished with a valuation above $2 trillion for the first time.

Taiwanese chip giant TSMC rose to a record high Monday, gaining 5.2 percent on the global rally in semiconductor stocks, and helped Taipei’s Taiex index add nearly two percent.

Favorable trade winds

The solid performance of global markets provides “favorable trade winds for Asian markets as the new week begins”, Stephen Innes of SPI Asset Management said in a note.

Hope for US interest rate cuts, indications of cooling inflation and a soaring passion for AI within the tech sector have driven investor sentiment, he said.

READ: Fed’s Waller sees ‘no rush’ to cut interest rates

“These factors collectively contribute to the positive tone in global markets, which is expected to bolster Asian markets,” Innes added.

While the US Federal Reserve is now expected to begin trimming rates later rather than sooner this year, due to recent hotter-than-expected inflation data, markets have been boosted by stellar earnings results from big tech firms in recent weeks.

Rate cuts later than sooner

Investors will be looking this week to the release of US jobs figures and Fed boss Jerome Powell’s testimony to Congress.

“We don’t expect the chair to stray very far from the Fed’s recent messaging — officials are in a ‘wait-and-see’ mode as there’s still a lot of ambiguity in the data,” John Briggs, global head of desk strategy at NatWest Markets, said in a note.

Hong Kong finished flat on Monday and Shanghai closed higher ahead of the start of China’s annual legislative conclave, with officials expressing concern over the nation’s struggling economy and youth unemployment as they ready to present policies for the coming year.

Later Monday, another official said China’s leaders had “ample confidence” that the economy would rebound.

READ: China’s parliament to unveil more stimulus this week

The rubber-stamp parliamentary meeting is expected to see leaders set an annual growth goal of about 5 percent for 2024, said Innes, following a reported GDP expansion of 5.2 percent last year — the lowest in decades, excluding the pandemic years.

China stimulus

“The announcements and policies unveiled during the parliamentary session will provide crucial insights into China’s economic priorities, strategies, and potential market developments,” he added.

While analysts have called for stronger interventions from Beijing to boost the economy, Innes said more measured moves are likely as a “big bang” stimulus could pose long-term risks to stability.

Seoul, Mumbai, Manila and Kuala Lumpur were up, while Sydney, Wellington, Jakarta and Singapore were down.

London and Paris opened lower, and Frankfurt was flat.