Asian stocks rally on U.S. inflation miss, Nikkei at 33-year peaks

Investing.com-- The Asian stock market experienced a significant rise on Monday due to a decline in U.S. inflation, which has increased expectations of a more lenient Federal Reserve. Furthermore, the Nikkei index reached its highest level in 33 years thanks to data indicating a positive outlook for Japan's economy.

Information released on Friday revealed that the Federal Reserve's drop in May exceeded expectations, causing a surge in the values of most assets driven by risk. This positive momentum carried over into Asian trading activities throughout the week.

However, it is still uncertain if the rally will continue to gain strength, as there are upcoming reports on the economy and signals from central banks this week. Moreover, the economic indicators released on Monday presented a varied perspective on the major economies of Asia.

Nikkei Surges On Better Sentiment, Yet Factory Activity Contracts

Japan's stock market saw a significant increase, with the country's index surging by 1.4% and the broader market also experiencing a rise of 1.3%. These impressive gains bring both indexes to levels that haven't been seen in over three decades.

An indicated that the overall attitude of businesses in the nation got better during the second quarter, suggesting that the economy was making a comeback as more companies promised to boost their investments.

The information in the article contributed to a rise in positive expectations for Japan's economy for this year. This, along with the supportive stance of the Bank of Japan, has led to significant increases in the value of Japanese stocks in recent months.

However, another study also reaffirmed that declined in June, suggesting that the main factors driving the country's economy were still facing difficulties.

Chinese Stocks Climb Higher Despite Mixed Factory Data

China's stock markets and indices increased by approximately 1.2% each, as a report demonstrated that China's manufacturing sector experienced more growth than initially anticipated in June. Hong Kong's index recorded a 1.9% surge due to the robust performance of Chinese stocks listed on the local market.

However, the pace of reading decelerated compared to the previous month, suggesting that certain aspects of the Chinese economy's resilience could be waning.

Monday's reading also came following a report last week indicating that China's manufacturing industry contracted for the third consecutive month in June.

Focus On Fed And Central Bank Cues

Asian markets made gains on Monday, with a range of economic indicators from both regional and U.S. sources expected in the coming week.

Australia experienced a modest increase of 0.5%, falling behind its neighboring countries in anticipation of an upcoming event on Tuesday, which experts predict will lead to a 25 basis point increase in interest rates. Furthermore, the economy contracted in June, as indicated by recent data.

South Korea experienced a 1.4% increase, whereas the index saw a 0.9% climb.

Additional signals regarding U.S. monetary policy remained at the forefront during the week, preceding the release of employment data for June, which is scheduled for this Friday.