Asian stocks delivered varied performance in limited trading due to public holidays in Hong Kong, New Zealand, and Australia. The U.S. dollar remained stable, driven by subdued American inflation data, which raised hopes that the Federal Reserve might reduce interest rates this June.
A well-watched U.S. inflation meter reported a minor increase in February 2024, and the cost of services, excluding housing, substantially decelerated, increasing chances of a Fed rate cut by June. The personal consumption expenditures (PCE) price index experienced a 0.3 percent increase in February, defying the economists' prediction of 0.4 percent rise.
However, the U.S. economy demonstrated resilience, backed by strong consumer spending. Fed Chair Jerome Powell hinted on Friday at the possibility of rate cuts, stating that the latest inflation data was "along the lines of what we would like to see," albeit cautiously noting the risks of maintaining the current interest rates.
Meanwhile, gold continued its historical rally, reaching a fresh high in global trading, while crude oil recorded marginal gains due to expected supply shortages resulting from OPEC+ cuts and assaults on Russian refineries.
China's Shanghai Composite index surged 1.19 percent to 3,077.38 following the revelation that its manufacturing activity blossomed in March, with the purchasing managers' index escalating from 49.1 to 50.8. A separate report, the Caixin Global's March manufacturing survey demonstrated a 13-month high in Chinese factory activity, with the PMI slightly exceeding expectations at 51.1.
Conversely, Japanese markets plunged excruciatingly, hitting a fortnight's lowest, as the yen hovered precariously, spurring currency intervention talks. Japan's Q1 Tankan survey presented a mixed picture of corporate sentiments. Large manufacturers depicted a drop in confidence, while the services sector experienced a 33-year high, pushing the Nikkei average down 1.40 percent to its lowest since March 18. The broader Topix index also fell 1.71 percent.
Semiconductor companies led the downfall, with major industry players like Tokyo Electron and Advantest dropping by 3.2 and 5 percent. Other hard-hit sectors included automakers and heavy machinery manufacturers, such as Toyota Motor, Kawasaki Heavy Industries, and Mitsubishi Heavy Industries, each witnessing a strong downward trend.
South Korean stocks, on the other hand, remained mostly flat, with the Kospi average recording a miniscule gain, achieving daily growth for a second day due to renewed optimism for U.S. rate cuts. Companies such as Korean Air, Hanjin KAL Corp, and JejuAir experienced gains between 2-4 percent.
