Asian Markets Track Global Markets Higher

Asian stock markets are trading mostly higher on Monday, following the broadly positive cues from global markets on Friday, as traders react to the unexpected cooler-than-expected US inflation for May. Asian markets closed mixed on Friday.

While economists generally still expect the US Fed to raise interest rates by another quarter point next month, the inflation data has added to optimism the central bank will not follow through with additional rate hikes.

The Australian stock market is slightly higher on Monday, extending the gains in the previous session, with the benchmark S&P/ASX 200 staying a tad above the 7,200 level, following the broadly positive cues from global markets on Friday, with miners pushing the market higher amid improved commodity prices.

The benchmark S&P/ASX 200 Index is gaining 26.90 points or 0.37 percent to 7,230.20, after touching a high of 7,232.90 earlier. The broader All Ordinaries Index is up 27.80 points or 0.38 percent to 7,429.30. Australian stocks closed slightly higher on Friday.

Among the major miners, BHP Group and Rio Tinto are edging up 0.2 to 0.3 percent each, while Mineral Resources is gaining almost 2 percent. Fortescue Metals is flat.

Oil stocks are mixed. Santos and Woodside Energy are edging down 0.1 percent each, while Beach energy is gaining almost 1 percent. Origin Energy is flat.

Among tech stocks, Xero is losing more than 1 percent and WiseTech Global is declining almost 2 percent, while Appen is edging up 0.4 percent and Afterpay owner Block is gaining more than 2 percent. Zip is flat.

Gold miners are mostly higher. Gold Road Resources, Evolution Mining, Northern Star Resources and Newcrest Mining are gaining more than 2 percent each, while Resolute Mining is adding more than 1 percent.

Among the big four banks, Commonwealth Bank and National Australia Bank are edging down 0.3 percent each, while Westpac and ANZ Banking are flat.

In other news, share in United Malt Group are surging more than 9 percent after the malt producer agreed to a A$1.5 billion takeover offer from Malteries Soufflet, a branch of French agribusiness InVivo.

Shares in Australian Vintage are soaring more than 10 percent after the winemaker hired corporate advisory firm E&P for a strategic review of its $100 million business.

In economic news, the manufacturing sector in Australia continued to contract in June, and at a faster pace, the latest survey from Judo Bank revealed on Monday with a manufacturing PMI score of 48.2. That’s down from 48.4 in May and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

Meanwhile, the Australian Bureau of Statistics said on Monday that the total number of building permits issued in Australia was up a seasonally adjusted 20.6 percent on month in May, coming in at 15,032. That beat expectations for an increase of 2.0 percent after dropping an upwardly revised 6.8 percent in April (originally -8.1 percent). On a yearly basis, approvals fell 9.8 percent.

In the currency market, the Aussie dollar is trading at $0.665 on Monday.

The Japanese stock market is sharply higher on Monday, recouping the slight losses in the previous session, with the Nikkei 225 moving above the 33,700 level toward fresh 33-year highs, following the broadly positive cues from global markets on Friday, boosted by gains across most sectors, led by exporters and technology stocks.

The benchmark Nikkei 225 Index closed the morning session at 33,704.73, up 515.69 or 1.55 percent, after touching a high of 33,738.30 earlier. Japanese shares ended slightly lower on Friday.

Market heavyweight SoftBank Group is edging down 0.1 percent, while Uniqlo operator Fast Retailing is edging up 0.2 percent. Among automakers, Honda is gaining almost 2 percent and Toyota is adding almost 1 percent.

In the tech space, Screen Holdings is gaining more than 2 percent, while Tokyo Electron and Advantest are advancing almost 4 percent each.

In the banking sector, Sumitomo Mitsui Financial is gaining almost 1 percent, Mitsubishi UFJ Financial is adding more than 1 percent and Mizuho Financial is edging up 0.3 percent.

The major exporters are mostly higher. Canon is gaining more than 1 percent, Sony is advancing more than 3 percent, Panasonic is adding almost 2 percent and Mitsubishi Electric is up almost 1 percent.

Among other major gainers, Daikin Industries is surging more than 6 percent, Z Holdings is gaining almost 6 percent and IHI is adding more than 4 percent, while Kawasaki Heavy Industries, Sharp, Tokai Carbon and Ebara are advancing almost 4 percent each. Taiyo Yuden, Kawasaki Kisen Kaisha and Mitsubishi Motors are up more than 3 percent each, while Shin-Etsu Chemical and TDK are advancing almost 3 percent each.

Conversely, there are no other major losers.

In economic news, the manufacturing sector in Japan slipped into contraction territory in June, the latest survey from Jibun Bank revealed on Monday with a manufacturing PMI score of 49.8. That’s down from 50.6 in May and it falls beneath the boom-or-bust line of 50 that separates expansion from contraction.

Meanwhile, the Bank of Japan’s quarterly Tankan Survey of business sentiment showed on Monday that large manufacturing in Japan strengthened in the second quarter of 2023, with a diffusion index score of +5. That beat forecasts for a reading of +3 and was up from +1 three months ago. The outlook came in at +9, exceeding expectations for +5 and up from +3 in the previous quarter.

Large all industry capex is now seen higher by 13.4 percent, blowing away forecast for 4.9 percent and up from 3.2 percent in the previous three months.

The large non-manufacturers index came in at +23, beating forecasts for +22 and up from +20. The outlook was +20, missing forecasts for +21 and up from +15 three months earlier.

The small manufacturing index was at -5, while the small non-manufacturing index was at +11.

In the currency market, the U.S. dollar is trading in the higher 144 yen-range on Monday.

Elsewhere in Asia, Hong Kong and South Korea are up 1.3 percent each, while China, Singapore, Malaysia, Taiwan and Indonesia are higher by between 0.2 and 0.8 percent each. New Zealand is bucking the trend and is down 0.2 percent.

On Wall Street, stocks moved sharply higher during trading on Friday, adding to the gains posted in Thursday’s session. The major averages all moved to the upside on the day, with the tech-heavy Nasdaq leading the advance.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Nasdaq surged 196.59 points or 1.5 percent to 13,787.92, the S&P 500 jumped 53.94 points or 1.2 percent to 4,450.38 and the Dow climbed 285.18 points or 0.8 percent to 34,407.60.

The major European markets also showed strong moves to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.8 percent, the French CAC 40 Index jumped by 1.2 percent and the German DAX Index surged by 1.3 percent.

Crude oil prices climbed higher Friday, extending recent gains, as a drop in U.S. crude inventories continued to support the commodity. West Texas Intermediate Crude oil futures for August ended higher by $0.78 or 1.1 percent at $70.64 a barrel. However, WTI Crude futures shed about 12 percent in first half and more than 6 percent in the second quarter.

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