Center Street in Shibuya. Getty Images
Asian markets saw a significant rise on Monday, with Japan's Nikkei 225 leading the charge. This uptick followed a crucial U.S. inflation report from late Friday that sparked hopes for an interest rate cut. The U.S. June personal consumption expenditures price index showed a modest increase of 0.1% from the previous month and a 2.5% rise compared to the previous year, aligning with economists' expectations.
Japan's Nikkei 225 surged by 2.26%, and the broader Topix index climbed 2.02%. This positive movement could break the Nikkei's eight-day losing streak. The Japanese yen also strengthened, rising 0.18% against the U.S. dollar to 153.44.
One of the standout performers in the Nikkei index was Mitsubishi Motors, which saw its shares jump over 6%. This spike came after Nikkei Asia reported that Mitsubishi would join the Honda-Nissan alliance to standardize in-vehicle software. This collaboration aims to consolidate the domestic market into two main forces: the Toyota Motor Group and the Honda-Nissan-Mitsubishi alliance.
Conversely, shares of Eisai plummeted by 13% following the European Medicines Agency's decision not to approve its Alzheimer's drug, Leqembi. This made Eisai the biggest laggard among the few Nikkei 225 stocks that fell amid the broader rally.
This week, all eyes are on the Bank of Japan's monetary policy meeting starting July 30. A Reuters poll suggests that the central bank may raise interest rates by 10 basis points to 0.1%. ING analysts predict an even higher increase of 15 basis points, along with a reduction in the bank's bond-buying program. They believe that Japan's economy is recovering, supported by solid wage growth in May, which could boost the central bank's confidence.
Other significant economic data from the region include China's July PMI data and Australia's latest inflation figures, which are set to be released ahead of the Reserve Bank of Australia's policy meeting on August 6.
Elsewhere in Asia, South Korea's Kospi index rose by 1.3%, and the Kosdaq gained 0.59%. Hong Kong's Hang Seng index climbed by 1.1%, although mainland China's CSI 300 fell by 0.3%, dragged down by utilities stocks. Australia's S&P/ASX 200 saw an increase of 0.84%, and Taiwan's Weighted Index rebounded by 1.04% after a significant drop last Friday due to a typhoon.
In the U.S., Friday's market performance was strong. The Dow Jones Industrial Average jumped 1.64%, the S&P 500 increased by 1.11%, and the Nasdaq Composite went up by 1.03%. These gains were driven by a combination of oversold sentiment, a better-than-expected GDP report, and the belief that the Federal Reserve will start cutting interest rates.
