China’s Xi speaks with Trump by phone, discusses Taiwan and bilateral ties
Updates at 00:00 ET (05:00 GMT) with India open, China-Japan context
Investing.com-- Most Asian stock rose on Monday, recouping some recent losses amid renewed market optimism that the U.S. Federal Reserve will cut interest rates in December.
Bargain buying into battered technology stocks also helped, as investors returned to the sector after steep losses in recent weeks. Still, regional trading volumes were dulled by a holiday in Japan.
Chinese stocks lagged, with local chipmaking shares falling sharply on a report that the U.S. was considering allowing NVIDIA Corporation (NASDAQ:NVDA) to resume sales of a key chip in the country.
Airline shares were also pressured by reports that Chinese travellers had canceled thousands of flights to Japan, amid heightened tensions between Beijing and Tokyo.
Asian markets took positive cues from Wall Street’s Friday session, where some dovish-leaning comments from Fed officials helped boost risk appetite. S&P 500 Futures rose 0.4%, as Wall Street sought to recover further from recent losses.
Asia stocks rise as Dec rate cut bets surge
Asian markets advanced, with Australia’s ASX 200 up 1%, while Singapore’s Straits Times index added 0.4%.
India’s Nifty 50 index rose 0.3%, while Hong Kong’s Hang Seng surged 1.6% on strength in broader tech shares.
South Korea’s KOSPI rose as much as 1.5% before sharply curbing gains to trade 0.2% higher.
Gains were driven chiefly by a resurgence in bets on a December rate cut by the Fed, especially after New York Fed President John Williams called for a rate cut in December.
Traders were seen pricing in a 67.3% chance for a 25 basis point cut in December, a sharp reversal from the 39.8% chance seen last week, CME Fedwatch showed.
A host of U.S. economic readings for September, including inflation and labor market prints, are due this week and are set to offer more cues on the world’s largest economy. But a lack of readings for October will still leave the Fed flying blind into its early-December meeting.
Still, the prospect of lower rates bodes well for risk-driven stock markets, given that lower rates free up more liquidity to be invested in risk.
China lags on chipmaker losses after Nvidia report
Chinese shares lagged on losses in major chipmaking stocks, while questions over Beijing’s plans for more stimulus also remained.
The mainland China Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell about 0.3% each, while gains in Hong Kong were also limited by chipmaker losses.
Semiconductor Manufacturing International Corp (HK:0981), the country’s biggest chipmaker, slumped 7.2%, while AI chipmaker Cambricon Technologies Corp Ltd (SS:688256) fell about 2%.
Local chipmakers were rattled by a report that the Donald Trump administration was considering allowing Nvidia to sell its H200 AI chips in China. Such a move could sap demand for locally-made chips and undermine Beijing’s push for complete self-reliance in AI.
The H200 is estimated to be twice as powerful as Nvidia’s H20 chip, the most advanced chip the country can currently sell in China under U.S. export restrictions.
But Nvidia being allowed to sell more advanced chips also allows China’s internet giants to continue with their AI development ambitions unimpeded. Major tech shares clocked some gains on Monday, with Tencent (HK:0700) up 0.7%.
Alibaba Group (HK:9988) surged 4% before its quarterly earnings on Tuesday, after the company said a recently released AI application clocked 10 million downloads within a week.
Baidu Inc (HK:9888) jumped nearly 2% after JPMorgan upgraded the firm to Overweight from Neutral and hiked its price target, citing growing potential from the firm’s AI and cloud push.
But the shares, along with broader Asian tech stocks, were nursing steep losses in recent weeks amid growing questions over an AI-fuelled valuation bump in the sector. Japanese and South Korean markets were the worst hit by this sell-off.
Chinese airline stocks also retreated on reports of outsized cancelations of routes to Japan, amid a growing diplomatic row between Beijing and Tokyo.
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