What to know:
- Asian markets opened mixed as Nikkei gained 0.24%, Hang Seng 0.63%, Shanghai 0.53%, while South Korea weakened.
- Brent crude dropped 4.7% to $92.27, U.S. crude fell 5.0% to $84.89, easing inflation concerns.
- Investors await Fed, BOJ, and BOE meetings as Microsoft, Apple, Meta, Amazon, and Qualcomm report earnings.
The Asian Market started the week with mixed performance as investors balanced improving geopolitical sentiment, easing oil prices, and a busy week of central bank meetings and corporate earnings. Japan, Hong Kong, and Chinese stock markets climbed while South Korean shares declined as different levels of investor confidence influenced their performance.
According to a recent post by Reuters, the Nikkei 225 was 0.24% higher after a huge fall at the end of last week due to the return to the shares of semiconductors and artificial intelligence. But the purchases were selective since the problem with excessive valuations of technology stocks was still relevant. Hang Seng Index went up by 0.63%, and the Shanghai Composite Index increased 0.53%, following the recovery of the Chinese economy and improving investor sentiment.
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Asian Market Gains Support From Lower Oil Prices
Positive sentiments among investors were caused by the improvement of the situation in the Middle East. According to NAB Group Chief Economist Sally Auld, recent events confirmed expectations that rising prices of oil led to a de-escalation. The price of Brent crude fell by 4.7% to $92.27 per barrel, and U.S. crude decreased by 5.0% to $84.89, reducing inflation worries and helping the Asian Market.
Lower prices of energy reduced the pressure on global inflation expectations, causing the decrease in the probability of a new U.S. Federal Reserve interest rate decision. Markets now estimate only about a one-third chance of a hike in the upcoming week despite the belief that softer data on inflation in June does not allow for an increase in interest rates during Wednesday’s meeting.
Goldman Sachs’ analysts consider the next Federal Reserve meeting quite unusual as the members of the committee are split on monetary policy decisions and geopolitical risks emerged in the period of communication blackout. The Asian Market will also closely monitor the Bank of England and Bank of Japan meetings later this week, with both institutions widely expected to leave interest rates unchanged.
Technology Earnings and Economic Data Could Shape Market Direction
Global equity futures strengthened alongside falling oil prices, with Nasdaq futures rising 1.3% and S&P 500 futures gaining 0.8%. Nearly one-third of S&P 500 companies, including Microsoft, Apple, Meta Platforms, Amazon, and Qualcomm, are scheduled to report quarterly earnings, offering a key test for technology sector valuations that could influence the Asian Market.
Investors will also focus on major economic releases, including U.S. second-quarter GDP, the Personal Consumption Expenditures inflation index, employment costs, consumer spending, and eurozone growth data. Falling Treasury yields supported gold prices, while analysts said earnings results, central bank guidance, and inflation trends will likely determine whether the Asian Market can extend its recent recovery in the coming sessions.
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