Asian stocks rose after China took steps to support the property market, while U.S. stocks hit a fresh record high on Friday on resilient corporate earnings.
The MSCI AC Asia Pacific Index advanced for a seventh session, with major stock indexes in China, Hong Kong, Australia and Japan rising. Chinese banks opted to keep lending rates unchanged, in line with economists’ expectations.
The world’s second-largest economy led trading on Monday as Beijing sought to boost a struggling property market that has hampered the country’s growth momentum, although concerns persist that the measures may fall short of what is needed. Metals prices, including gold, also rose, with copper hitting a fresh record high amid supply concerns.
Recovery of the Chinese real estate sector
“We believe China’s stimulus packages are just the beginning of the central government’s efforts to revive the property sector,” Nomura Holdings analysts wrote in a research note. “The quick announcement of the package of measures without providing much detail on how they will be implemented also suggests that the country’s central government feels an increasingly urgent need to mitigate the ongoing deterioration in the property sector.”
Investors are also watching the Middle East after a helicopter carrying Iranian President Ebrahim Raisi crashed in heavy fog. Oil prices fell in early Asian trading.
US Interest Rate Forecast
On the currency front, the Bloomberg Dollar Index was little changed after falling last week, as traders increased bets on a Federal Reserve rate cut after U.S. inflation fell more than economists had expected in April. A slew of Fed officials are scheduled to speak this week, including Governor Christopher Waller, who is set to speak on the state of the U.S. economy and monetary policy.
“We continue to expect the Fed to cut rates by 50 basis points this year, with further cuts in 2025 and 2026. This creates favorable macroeconomic conditions that support our investment recommendations for high-quality bonds and stocks,” said Solita Marsili, chief investment officer for the Americas at UBS Global Wealth Management.
Middle East Developments
Developments in the Middle East could also change the course of the trade, as rescue teams in Iran searched throughout the night to try to locate President Raisi, who was seen as the favorite to succeed Supreme Leader Ayatollah Ali Khamenei (the highest authority in the Islamic Republic).
On the other hand, the official Saudi Press Agency (SPA) reported that the Saudi monarch, King Salman bin Abdulaziz, underwent medical tests that revealed pneumonia, and the medical team decided to subject him to a treatment program.
The markets’ agenda this week also includes economic activity data from Europe, as well as inflation readings from the UK, Canada and Japan. Monetary policy decisions are also scheduled in New Zealand, Indonesia, South Korea and Chile, and Nvidia is expected to report earnings.
