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Updates at 00:15 ET (04:15 GMT) with India open, HSBC on China
Investing.com-- Most Asian stocks rose on Monday, tracking gains in Wall Street after dovish signals from the Federal Reserve ramped up bets that interest rate cuts were coming in the next month.
Chinese and Hong Kong stocks were the best performers in the region, as they benefited from a rally in local technology and artificial intelligence stocks.
S&P 500 Futures fell 0.1% in Asian trade, steadying after the S&P 500 surged 1.5% on Friday. Wall Street’s rally was sparked chiefly by Fed Chair Jerome Powell signaling more openness to cut interest rates, amid concerns over a cooling labor market. But Powell still signaled caution over cutting rates due to an uncertain outlook for inflation.
Markets were seen ratcheting up bets on a 25 basis point cut in September following Powell’s statement, CME Fedwatch showed.
China stocks soar; chipmakers rally on self reliance bets, Nvidia scrutiny
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 1.3% and 1%, respectively, while Hong Kong’s Hang Seng index rallied as much as 2.2%.
The CSI300 reached its highest level since mid-2022, while the Shanghai Composite was near a 10-year high. Both indexes rallied sharply in August on increasing optimism towards the Chinese economy, as U.S. trade ties improved and as local growth stabilized.
HSBC hiked its year-end targets for Chinese stock indexes, with analysts seeing a sustained rally in local markets on strong domestic liquidity. The AI infrastructure trade and biotech dominance is also expected to boost Chinese markets.
The Hang Seng was near a four-year high, buoyed chiefly by gains in local tech and chipmaking stocks. Tech was boosted by expectations of lower U.S. interest rates, which increases the long-term appeal of the sector.
Chipmakers rallied amid increasing encouragement by Beijing that Chinese developers, especially in AI, use locally produced chips. This comes shortly after AI major NVIDIA Corporation (NASDAQ:NVDA) received approval to resume sales of its wildly popular H20 chip in China, although Beijing warned local developers against using foreign chips.
Chinese chip stocks have been on a tear since last week after major AI developer DeepSeek released an updated model which it billed as more adapted for domestically made chips.
Semiconductor Manufacturing International Corp (HK:0981), China’s biggest chipmaker, soared over 6% in HK trade, while Hua Hong Semiconductor Ltd (HK:1347) surged to an over four-year high before sharply curbing gains.
Cambricon Technologies Corp Ltd (SS:688256), a major Chinese developer of AI chips, soared 8.3% to a record high in Shanghai trade.
Asia stocks cheered by rate cut bets
Broader Asian markets also advanced amid growing conviction that the Fed will cut interest rates in September. Lower rates benefit risk-heavy Asian markets by inviting more foreign capital flows into assets with higher yields.
Japan’s Nikkei 225 and TOPIX indexes rose 0.7% and 0.3%, respectively.
South Korea’s KOSPI rose 1% on gains in tech and chips, while Singapore’s Straits Times index was mildly positive. Australia’s ASX 200 also lagged, rising only 0.2%, but remained close to recent record highs.
Indian shares on guard as Trump tariff deadline looms
Indian shares also lagged their Asian peers, with the Nifty 50 index adding 0.3% in morning trade.
Focus was squarely on an August 27-28 deadline, when U.S. President Donald Trump’s 50% tariffs against New Delhi will take effect. Indian markets had initially rallied past Trump’s threat after the government outlined a host of tax reforms aimed at supporting the local economy.
But Trump’s tariffs present long-term economic headwinds for India, especially against the country’s booming export market. Trump’s 50% levy is largely aimed at pressuring New Delhi into curtailing its purchases of Russian oil.