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Japan’s Nikkei 225 index surged past the historic 42,000 mark for the first time, driven by a 0.97% gain powered by strong performances in technology stocks. This milestone coincided with a broader rally across Asia-Pacific markets, buoyed by optimism about potential Federal Reserve rate cuts.

The Nikkei’s record-breaking rise highlighted positive economic signs, including a significant 10.8% year-on-year increase in core machinery orders, which surpassed expectations. However, month-on-month figures showed a 3.2% decline, signaling some economic challenges ahead despite the overall positive mood.

Elsewhere in the region, South Korea’s Kospi index climbed 0.75%, supported by the Bank of Korea’s decision to keep its benchmark interest rate steady at 3.5% for the 12th straight time. Australia’s S&P/ASX 200 index also saw a 0.93% increase, reflecting widespread optimism in the market.

Hong Kong’s Hang Seng Index surged 1.41%, and mainland China’s CSI 300 index edged up by 0.35%, following strong gains on Wall Street. The S&P 500 and Nasdaq Composite indices both closed over 1% higher, reaching new record levels.

In the U.S., chip stocks were standout performers, with companies like Taiwan Semiconductor Manufacturing Company and Nvidia benefiting from strong earnings reports and expectations of favorable inflation data.

Market sentiment was further bolstered by anticipated inflation rates, with projections indicating a decrease to 3.1% year-over-year in June from 3.3% in May. Core inflation, excluding food and energy prices, was expected to rise modestly to 3.4%.

In regional developments, Japan’s automotive sector received a boost as Toyota enjoyed a policy change in India, resulting in a 10% reduction in hybrid car prices. Meanwhile, South Korea prepared to release its GDP figures later in the month, supported by a financial package aimed at boosting key sectors and assisting small businesses affected by high interest rates.

As global markets navigate economic complexities, the surge in Asia-Pacific indices signals optimism among investors, driven by strong corporate earnings and strategic policy decisions. The ongoing momentum underscores a cautious yet hopeful outlook as markets continue to evolve amidst global economic dynamics.

Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

11tth July, 2024

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