Asian Markets Rise Following U.S. Stock Records

BANGKOK (AP) — Asian shares opened mostly higher in response to U.S. stocks achieving record highs as they closed another successful week. U.S. futures and oil prices also experienced increases.

In Hong Kong, the Hang Seng index was an exception, decreasing by 0.6% to a level of 20,869.39. Conversely, the Shanghai Composite saw a rise of 0.8% reaching 3,288.32, while the A-share index from the smaller Shenzhen market surged by 2.2%.

The upward movement in mainland Chinese markets was driven by recent cuts to the one-year and five-year Loan Prime Rates, which are essential reference rates for lenders. Lower borrowing rates can alleviate pressure on borrowers, particularly property developers that have faced challenges following measures against excessive debt taking a few years ago.

According to Zichun Huang from Capital Economics, addressing the main issue of weak demand will require significant government spending. China’s Finance Ministry has stated that it will increase its expenditures in the months ahead. However, Huang remains doubtful that this fiscal easing will be sufficient to lead to anything more than a slight and brief rise in economic activity.

Meanwhile, Japan's Nikkei 225 index increased by 0.3% to 39,078.33, while Seoul's Kospi climbed by 0.8% to 2,614.75. In Australia, the S&P/ASX 200 rose 0.7% reaching 8,340.40.

Oil prices also noted a modest increase after prices had fallen the previous week. Concerns had diminished regarding potential Israeli strikes on Iranian oil installations as retaliation for an earlier missile attack by Iran. Given that Iran is a significant oil producer, any disruption in their exports could affect markets globally, particularly China.

On Monday morning, U.S. benchmark crude oil rose by 38 cents to $69.07 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the global standard, saw an increase of 31 cents to $73.37 per barrel.

The U.S. dollar weakened slightly against the Japanese yen, falling to 149.23 from 149.57 late on Friday, due to declining expectations regarding the pace of interest rate hikes by the Bank of Japan.

In addition, the euro dipped to $1.0865, down from $1.0867.

On Wall Street last Friday, further records were established.

The S&P 500 index climbed by 0.4% to surpass the all-time high it had set earlier in the week, closing at a new record of 5,864.67. The Dow Jones Industrial Average gained 0.1%, reaching 43,275.91, marking another record, while the Nasdaq composite increased by 0.6% to 18,489.55.

Trading on Wall Street overall remained calm, allowing the S&P 500 to complete its sixth consecutive week of gains, marking its longest winning streak in 2024.

Positive economic reports have enhanced hopes that the U.S. economy can navigate through high inflation without falling into a severe recession, which many investors had previously anticipated. With the Federal Reserve now reducing interest rates to support economic growth, optimistic expectations are that stock prices might rise even further.

Netflix was a notable influence on the market, jumping 11.1% after announcing quarterly profits that exceeded analyst forecasts, despite a slowdown in subscriber growth.

This strong performance helped to counterbalance a 5.2% decline for CVS Health, which indicated it would likely report profits below analysts' expectations for the latest quarter.

Market participants appear to be coalescing around expectations that the Federal Reserve will implement a quarter-percentage-point interest rate cut in its next meeting scheduled for November. Prior anticipations had pointed to a more significant half-percentage-point reduction, but better-than-expected economic data has altered those expectations. Currently, the federal funds rate is maintained within a range of 4.75% to 5%.

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