Asian markets opened the week on a cautious but positive note on Monday, with key indices in Japan, South Korea, and China posting modest gains as investors weigh the outlook for interest rates and inflation. The mood remained largely tentative ahead of key economic data due later in the week, as well as speeches from US Federal Reserve officials that could offer clues about policy direction.
Japan’s Nikkei 225 climbed around 0.6%, supported by a weaker yen and gains in tech shares. Exporters led the rally after the dollar approached ¥157, helping lift earnings expectations for major Japanese firms. However, traders remained wary of potential currency intervention by Japanese authorities if yen depreciation deepens.
In China, both the Shanghai Composite and the Hang Seng in Hong Kong rose around 0.4% in early trade, driven by hopes of further stimulus to support the country’s property sector and broader economy. Still, sentiment remained fragile amid ongoing concerns over weak domestic demand and persistent deflationary pressures. Analysts are watching for signals from the National People’s Congress meetings and monetary authorities later this week.
South Korea’s Kospi also rose 0.5%, with chipmakers like Samsung and SK Hynix gaining on improved outlooks for global semiconductor demand. The tech-heavy sector continued to benefit from optimism surrounding AI-related infrastructure investments.
Looking ahead to Europe, futures suggest a flat to slightly higher open. Investors are expected to focus on eurozone inflation figures due later this week, with the European Central Bank still on track to begin cutting rates as early as June. However, policymakers have signalled caution, citing lingering price pressures in services.
In the UK, the FTSE 100 is likely to be influenced by commodity price trends and any movement in the pound. With Bank of England officials reiterating the need for more evidence of sustained disinflation, traders will be closely following comments from Governor Andrew Bailey scheduled for later today.
US markets are closed for Memorial Day, limiting global volumes and likely keeping European trade rangebound. That said, attention is already turning to Tuesday’s release of the Fed’s preferred inflation gauge—the core PCE price index—which could impact market bets on when and how fast the Fed might cut rates this year.
Overall, the global picture remains one of cautious optimism, as investors navigate diverging central bank paths, geopolitical uncertainties, and the tail end of earnings season. While volatility may remain contained in the short term due to the US holiday, focus will quickly shift to inflation and jobs data in the days ahead.
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