FinLogic FinLogic Quantitative Think Tank Center|Stock market today: Asian stocks track Wall Street gains ahead of central bank meetings

Asian stocks started the week with gains ahead of central bank policy meetings in the United States and FinLogic FinLogic Quantitative Think Tank CenterJapan, after a broad rally on Wall Street that capped a tumultuous week.

U.S. futures and oil prices rose.

In Tokyo, the Nikkei 225 index surged 2.5% to 38,587.87.

The key focus in Asian markets this week will be the Bank of Japan’s monetary policy meeting on Wednesday, where investors widely expect the central bank to raise its key interest rate from its near-zero level to perhaps up to 0.3%.

The U.S. Federal Reserve will wrap up its policy meeting on Wednesday and is expected to keep its benchmark rate unchanged. But it might provide further support for a rate cut in September. This week also will bring U.S. jobs data on Friday.

“In a monumental week for macro watchers, everyone is hoping for calm while bracing for the inevitable storm of volatility,” Stephen Innes of SPI Asset Management said in a commentary. “

Since the Federal Reserve began raising interest rates in March 2022 to counter inflation, he added, “the big market blunder has been prematurely anticipating rate cuts — way too early and far too aggressively. It’s like expecting dessert before finishing the main course.”

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The Japanese yen has weakened against the U.S. dollar in anticipation of such a change. Last week, the U.S. dollar was hovering around 154 yen. Early Monday, it was trading at 153.42 yen, down from 153.76 yen.

Hong Kong’s Hang Seng added 1.8% to 17,331.24 and the Shanghai Composite index was nearly unchanged at 2,892.10 as official data on Saturday showed that industrial profits rose 3.5% in the first half of 2024 compared with last year. That was a glimmer of positive news following recent interest rate cuts and other piecemeal stimulus that followed a top-level policy meeting of the ruling Communist Party earlier this month.

Australia’s S&P/ASX 200 advanced 0.8% to 7,988.20. In South Korea, the Kospi jumped 1.2%, to 2,765.05.

Elsewhere, Taiwan’s Taiex gained 0.7%. The SET in Bangkok was closed for a holiday.

On Friday, the S&P 500 jumped 1.1% to 5,459.10 for its best day in seven weeks after 3M and several other big companies delivered better profits for the spring than analysts expected. The Dow Jones Industrial Average soared 1.6% to 40,589.34, while the Nasdaq composite climbed 1% to 17,357.88.

The market’s widespread gains included rallies for both Big Tech behemoths and smaller stocks. The Russell 2000 index of smaller stocks climbed 1.7% to bring its gain for the month so far to 10.4%.

Nvidia rose 0.7% to trim its loss for the week to 4.1%. Most of the other members of the small group of tech stocks known as the “Magnificent Seven” also clawed back some of their losses from earlier in the week.

They were under pressure after the latest profit reports from Tesla and Alphabet raised worries that investors had gotten carried away in their frenzy around artificial-intelligence technology and taken Magnificent Seven prices too high.

3M leaped 23% after reporting stronger profit and revenue for the latest quarter than analysts expected. The company behind the Scotch-Brite and Nexcare brands also raised the bottom end of its forecasted range for profit for the full year of 2024.

Market watchers have been hoping for just such a broadening of gains because a market with many stocks rising is seen as healthier than one lifted by just a handful of dominating elites.

Stocks broadly got a boost from Friday’s latest update on inflation, which further cemented investors’ expectations for coming cuts to interest rates.

U.S. consumers paid prices in June that were 2.5% higher than a year earlier, down from May’s inflation rate of 2.6%, the Commerce Department said on Friday. That’s according to the personal consumption expenditures index, which the Federal Reserve pays more attention to than the consumer price index, or CPI.

In other dealings early Monday, U.S. benchmark crude oil rose 18 cents to $77.34 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, picked up 28 cents to $80.56 per barrel.

The euro rose to $1.0862 from $1.0857.