Asian stock markets rose on Monday, following Wall Street's lead after the Federal Reserve's preferred measure of inflation came in lower than anticipated. This bolstered expectations for potential interest rate cuts by the U.S. Federal Reserve in 2025. The positive market sentiment was further supported by predictions of additional Chinese economic stimulus and the approval of a vital funding bill in the U.S., which averted a government shutdown at the end of the year.
The dollar index remained stable, and bond yields showed little movement after last week's core Personal Consumption Expenditure (PCE) inflation figures pointed to weakening price pressures. In Asian trading, the prices of gold and oil saw moderate increases.
China's Shanghai Composite Index experienced a 0.5% decline to close at 3,351.26 after a session marked by volatility. Meanwhile, Hong Kong's Hang Seng Index surged by 0.82% to 19,883.13 as investors expected China to increase economic support and adopt a moderately loose monetary policy in the coming year.
Japanese markets saw significant gains, driven by advances in the automotive and technology sectors. The Nikkei 225 rose 1.19% to 39,161.34, while the broader Topix Index increased by 0.92% to close at 2,726.74. Among notable performers, Toyota Motor saw a 2.4% rise, Nissan gained 1.5%, Honda Motor climbed 3.8%, Tokyo Electron increased 1.3%, and Advantest soared 4.5%.
In South Korea, stock markets rallied as foreign and institutional investors became net buyers following the release of comparatively soft U.S. PCE inflation data. The Kospi Index advanced by 1.57% to 2,442.01. Tech giants Samsung Electronics and SK Hynix registered gains of about 1% and 0.7%, respectively. Hanmi Semiconductor achieved an 8.7% surge following the removal of uncertainties related to U.S. government semiconductor subsidies.
Australian stocks rebounded sharply after significant declines in the previous session. The benchmark S&P/ASX 200 Index concluded the day up 1.67% at 8,201.60, fueled by gains in banking and mining sectors following an unexpected drop in the U.S. inflation figures. The broader All Ordinaries Index closed 1.64% higher at 8,452.70, with market participants anticipating the minutes from the Reserve Bank of Australia's meeting.
In New Zealand, the benchmark S&P/NZX-50 Index increased by 0.65% to 12,988.03, aligning with positive sentiment ahead of the Christmas season.
U.S. markets saw robust gains on Friday, propelled by the release of lower-than-expected inflation numbers. The PCE inflation, favored by the Federal Reserve as a gauge of consumer price changes, rose by 0.1% month-on-month in November, below the expected 0.2% rise. The annual increase was 2.4%, up from 2.3% the previous month, but still below the anticipated 2.5%. Core PCE inflation decelerated to 0.1% from 0.3% in October, with the annual rate steady at 2.8%.
Chicago Fed President Austan Goolsbee expressed optimism on CNBC, suggesting that recent firming could be a short-term bump rather than a persistent trend. The Dow Jones Industrial Average increased by 1.2%, recovering from a previous marginal increase that ended a ten-day losing streak. The Nasdaq Composite and the S&P 500 also posted gains, rising by 1% and 1.1%, respectively.
