Asian Stocks Rise Following Wall Street’s Winning Week

by | May 20, 2024 | Forex News, News | 0 comments


Asian stocks advanced on Monday, following a positive close on Wall Street where the Dow Jones Industrial Average surpassed 40,000 for the first time. U.S. futures rose, and oil prices climbed as investors focused on the Middle East, where a helicopter carrying Iranian President Ebrahim Raisi and other officials crashed in the mountainous northwest reaches of Iran on Sunday.

China’s market continued its upward momentum from last week after the central bank introduced new measures to support the property sector. These measures included reducing required down payments for housing loans, lowering mortgage interest rates for first and second home purchases, and removing the mortgage rate floor. The Hang Seng in Hong Kong added 0.5% to 19,648.19, with its property index up 0.6% by midday. The Shanghai Composite index rose 0.3% to 3,162.08.

On Monday, China’s central bank left the one- and five-year loan prime rates unchanged at 3.45% and 3.95%, respectively. The one-year LPR serves as the benchmark for most new and outstanding loans in China, while the five-year rate affects the pricing of property mortgages.

In Tokyo, the Nikkei 225 index surged 1.4% to 39,346.92. Australia’s S&P/ASX 200 gained 0.6% to 7,862.70, and South Korea’s Kospi increased by 0.6% to 2,741.55. Elsewhere, Taiwan’s Taiex edged 0.1% higher following the inauguration of Lai Ching-te as Taiwan’s new president. Lai is expected to maintain Taiwan’s de facto independence policy from China and bolster its defenses against Beijing. In Bangkok, the SET was up 0.3%.On Friday, the Dow rose 0.3% to 40,003.59, marking a milestone as it topped the 40,000 level for the first time. U.S. indexes have been climbing since autumn 2022, driven by resilience in the economy and corporate profits despite high inflation and interest rates. The S&P 500, a key index for Wall Street and most retirement savers, added 0.1% to 5,303.27, closing just shy of its record set on Wednesday and finishing a fourth consecutive week of gains. The Nasdaq composite slipped 0.1% to 16,685.97.

Treasury yields also ticked higher. Last week’s data rekindled hopes that inflation is finally heading in the right direction, boosting expectations for the Federal Reserve to cut its main interest rate at least once this year. Currently, the federal funds rate is at its highest level in over two decades, and a potential cut could stimulate investment prices and alleviate some economic pressures.

However, some economists caution against over-optimism. While recent data reports have been better than expected, inflation remains above the Fed’s target. Bank of America’s Michael Gapen expects the Fed to hold its main interest rate steady until a possible cut in December.

In the bond market, the yield on the 10-year Treasury rose to 4.41% from 4.38% late Thursday. In other trading, benchmark U.S. crude oil increased by 3 cents to $79.61 per barrel, and Brent crude added 10 cents to $84.08 per barrel. The U.S. dollar strengthened to 155.79 Japanese yen from 155.55 yen, and the euro rose to $1.0877 from $1.0871.

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