Buoyed by optimism sparked by Wall Street’s rally, Asian stock markets mostly climbed on Tuesday despite lingering concerns over inflation and regional economic growth. Investors also awaited the latest policy decision from the Reserve Bank of Australia, although analysts do not expect the central bank to raise interest rates at this time.
The upbeat mood fueled gains in Japan, where the Nikkei 225 index jumped 0.7% in morning trading. Australia’s S&P/ASX 200 rose nearly 0.4%, while South Korea’s Kospi index surged 1.3%. Hong Kong’s Hang Seng was little changed, edging down slightly, as was the Shanghai Composite Index.
Wall Street extended its winning streak in July, notching a fifth straight month of gains for the S&P 500 index. The benchmark rose 0.1% on Monday to close at 4,588.96, reaching a 16-month high as optimism grows that cooling inflation may allow the economy to avoid recession.
However, some critics caution that expectations of a “soft landing” for the economy have come too swiftly. Further data, including Friday’s jobs report, could challenge the narrative of steadily declining inflation. Fed Chair Jerome Powell has signaled the jobs data will be an important indicator of whether growth is strong enough to keep inflation in check.
Two market bellwethers, Amazon and Apple, are set to report earnings on Thursday. With both stocks up over 50% this year amid high growth forecasts, investors will be looking for results to justify the big rallies.
In the bond market, yields dipped after weaker-than-expected manufacturing data, reflecting ongoing economic uncertainty. Still, corporate earnings have been beating forecasts more often than usual this season, suggesting the profit cycle may be turning higher according to some strategists.
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