Equities rose on Monday in Asia, continuing the positive momentum from New York, where the Dow closed at a record high. Sentiment was boosted by China’s plan to support its struggling property sector and hopes for a US interest rate cut, according to APP.
China’s announcement on Friday provided a significant lift to its ailing developers, many of whom are heavily indebted. The multibillion-dollar plan, along with eased deposit requirements for buyers, fueled optimism for the outlook of the world’s second-largest economy, which has been hampered by a property crisis.
While analysts cautioned that the proposals might be insufficient to fully address the issues, traders remained optimistic, purchasing risk assets. “We believe the policy package is just the beginning of the central government’s efforts to turn the sector around,” said Nomura Holdings analysts. They noted that the rapid introduction of the package with limited implementation details highlights the government’s urgency to alleviate the property sector’s downward spiral.
In Hong Kong, markets extended their recent gains, although some Chinese developers saw declines due to profit-taking after previous session surges. Markets in Shanghai, Tokyo, Sydney, Seoul, Singapore, Wellington, Taipei, Manila, and Jakarta also advanced.
The upbeat start to the week followed the Dow closing above 40,000 for the first time on Friday, with the S&P 500 also rising. Investors are now anticipating the release of minutes from the Federal Reserve’s May policy decision on Wednesday, seeking insights into the decision-makers’ perspectives.
Last week’s data showing easing inflation in April revived hopes for a rate cut, following higher-than-expected inflation in the previous three months. Analysts are forecasting two rate reductions before January, with further cuts expected over the next two years.
However, Fed Governor Michelle Bowman expressed a differing view, suggesting borrowing costs should remain elevated to ensure price control and signaling support for another hike if data surpass expectations. “My baseline outlook continues to be that inflation will decline further with the policy rate held steady, but I still see a number of upside inflation risks that affect my outlook,” Bowman said. She warned that loosening financial conditions and additional fiscal stimulus could stall progress or even cause inflation to reaccelerate.
The prospect of US interest rates declining boosted gold prices to a record high of $2,440.59, surpassing last month’s all-time high. Lower borrowing costs increase the appeal of the precious metal. Gold’s gains were also driven by its safe-haven status following news that a helicopter carrying Iran’s President Ebrahim Raisi had been involved in an accident, with the nation’s Red Crescent describing the situation as “not good.”
