Asian Markets Rally Following Record Close on Wall Street

Asian shares opened predominantly higher following another record-setting close on Wall Street, maintaining the upward momentum from the previous week. U.S. stock futures and oil prices also saw gains in early trading.

While Hong Kong's Hang Seng index experienced a slight decline of 0.6%, trading at 20,869.39, other major Asian markets saw positive results. The Shanghai Composite rose by 0.8%, reaching 3,288.32, and the Shenzhen A-share index surged 2.2%. These gains in mainland China came after the government cut the one-year and five-year Loan Prime Rates, which serve as benchmarks for loans. Such reductions are expected to ease the financial burden on borrowers, especially property developers who have been struggling since stricter borrowing regulations were implemented.

Despite the efforts to stimulate demand, analysts suggest that it will be up to government spending to drive substantial growth. Zichun Huang from Capital Economics commented that while the Chinese Finance Ministry plans to increase spending in the coming months, there are doubts about whether this effort will lead to a significant or long-lasting boost in economic activity.

In Japan, the Nikkei 225 index increased by 0.3%, reaching 39,078.33, while the Kospi in South Korea climbed 0.8% to 2,614.75. Australia's S&P/ASX 200 also enjoyed a gain, rising 0.7% to 8,340.40.

Additionally, oil prices experienced small rises after a substantial drop the previous week. The concerns that Israel may target Iranian oil facilities have subsided, reducing fears of disruption to crude oil exports, particularly to China. Early Monday trading saw U.S. benchmark crude gaining 38 cents to $69.07 per barrel, whereas Brent crude gained 31 cents to $73.37 per barrel.

The dollar fell to 149.23 Japanese yen, down from 149.57 yen seen on Friday. The yen's recent weakness reflects expectations that the Bank of Japan might slow its pace of interest rate hikes.

On the currency market, the euro also showed a minor slip to $1.0865 from the previous $1.0867.

Looking back at the U.S. markets, Wall Street marked another set of records on Friday. The S&P 500 managed a 0.4% increase to settle just above its all-time high, closing at 5,864.67. The Dow Jones Industrial Average rose 0.1% to a record of 43,275.91, while the Nasdaq composite gained 0.6%, closing at 18,489.55.

Overall trading remained stable, with the S&P 500 concluding its sixth consecutive winning week, marking its longest streak of the year. Positive economic indicators have heightened optimism that the U.S. economy might navigate through its current inflationary period without dipping into a recession, which many investors had previously anticipated. The Federal Reserve's recent interest rate cuts have also stirred hopes that the stock market could continue to rise.

Netflix played a significant role in driving this market surge, with shares jumping 11.1% after the company reported quarterly profits that exceeded analysts' forecasts, despite a noticeable slow in subscriber growth. This rise outweighed a 5.2% decline in CVS Health, which announced it expects to report earnings below market expectations.

Market sentiment is coalescing around the prospect that the Federal Reserve may implement a quarter-point interest rate cut during its next meeting in November. Previously, there had been higher expectations for a more drastic cut of half a percentage point, but upbeat economic data has tempered those hopes. The current federal funds rate sits between 4.75% and 5%.

Asian, Markets, WallStreet