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Regional stocks tracked a strong lead-in from Wall Street on Friday, after mixed payrolls and unemployment data showed more cooling in the jobs market, which gives the Fed less headroom to keep raising interest rates. This fed expectations that the central bank will keep rates on hold in September and potentially the remainder of the year.
While U.S. rates are likely to remain higher for longer, the prospect of no more rate increases points to some relief for Asian markets, which were battered by rising rates over the past year.
Chinese markets were the best performers in Asia on Monday, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rising over 1% each.
Hong Kong’s Hang Seng index surged 1.8%, buoyed chiefly by property stocks as Country Garden Holdings (HK:2007) earned bondholder approval to extend some debt deadlines, averting a potential default. The stock jumped nearly 10% and was the top performer on the Hang Seng.
Heavyweight technology stocks were also supported by the prospect of no more U.S. rate hikes, while oil and gas stocks surged tracking strong crude prices.
Focus is now on any more measures from Beijing to shore up economic growth, particularly more supportive measures for the property market after China increased local dollar liquidity and loosened some mortgage rules last week.
Markets were also awaiting Chinese trade data this week, after purchasing managers’ index data from last week showed some improvement in the world’s second-largest economy.
Optimism over China fueled gains in other Asian markets, with Japan’s Nikkei 225 up 0.4%, while the broader TOPIX added 0.6%.
South Korea’s KOSPI added 0.1%, while futures for India’s Nifty 50 index pointed to a mildly positive open.
Australia’s ASX 200 index rose 0.4% on Monday, with focus turning to a Reserve Bank of Australia meeting on Tuesday.
The central bank is widely expected to keep rates on pause, given that Australian inflation has cooled substantially in recent months. The bank is also expected to offer no major changes before a coming overhaul in its top brass, with Deputy Governor Michele Bullock set to take over as Governor after Philip Lowe’s (NYSE:LOW) term ends later this month.
Gains in BHP Group Ltd (ASX:BHP), the biggest stock on the ASX 200, also supported the index, after the anglo-Australian miner said a Brazilian court had approved its plans to reorganize its Samarco joint venture, as part of the repercussions of a 2015 dam collapse that killed 19 people and was Brazil’s worst ever environmental disaster.
