June 3 2024: Most Asian stocks surged on Monday, fueled by speculation over interest rate cuts by major central banks, which bolstered demand for risk-driven assets.
Technology-heavy indexes led the gains, with chipmakers benefiting significantly after NVIDIA Corporation (NASDAQ: NVDA) announced a new line of artificial intelligence chips, driven by robust demand in the rapidly expanding industry, resulting in impressive quarterly earnings.
India’s Nifty 50 index was a standout, reaching record highs as exit polls indicated the NDA alliance, led by the BJP party, was set to win the 2024 general elections.
Market Highlights:
Global Influence:
Asian stocks followed the strong performance on Wall Street from last Friday, where a key inflation reading met expectations, leading traders to increase their positions in anticipation of a potential interest rate cut by the Federal Reserve in September.
U.S. stock index futures rose during Asian trading hours.
Central Bank Decisions:
This week’s focus includes interest rate decisions from the European Central Bank (ECB) and the Bank of Canada, both expected to start cutting rates, potentially triggering a wave of global monetary easing.
The Federal Reserve is scheduled to meet next week, with expectations of maintaining current rates.
Tech Stocks Lead Gains on AI Excitement:
Hong Kong’s Hang Seng Index and South Korea’s KOSPI were among the top performers, rising between 2% and 2.5%, with chipmakers like Semiconductor Manufacturing International Corp (HK:0981) and SK Hynix Inc (KS:000660) benefiting from Nvidia’s news.
Taiwan Weighted Index rose 1.9%, driven by a nearly 4% increase in TSMC (TW:2330), Nvidia’s largest supplier and a major player in the AI boom.
Japan’s Nikkei 225 Index added 0.8%, while Australia’s ASX 200 rose 0.7%.
India’s Nifty 50 Hits Record High on Election Optimism:
The Nifty 50 index jumped 3% to a record high of 23,321 points after exit polls suggested the NDA alliance, led by the incumbent BJP party, was set to win the 2024 general elections, securing a third consecutive term for Prime Minister Narendra Modi.
This rally was foreshadowed by a 3.5% surge in Gift Nifty 50 Futures before the market opened.
Both local and foreign investors have welcomed Modi’s business-friendly policies, which have driven significant economic growth in India and propelled the Nifty 50 to multiple record highs. Manufacturing and infrastructure stocks are expected to benefit from another BJP term.
Official election results are expected on Tuesday morning.
Chinese Stocks Lag Amid Mixed PMI Data:
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite Indexes rose marginally, underperforming their Asian peers due to mixed economic signals from recent purchasing managers’ index (PMI) data.
Private PMI data released on Monday indicated that the manufacturing sector grew more than expected in May, expanding for the seventh consecutive month. However, this contrasted with official PMI data from the previous week, which showed an unexpected contraction in the manufacturing sector.
