HONG KONG– Asian stocks advanced on Monday after US stock indexes came close to their record highs, with the Dow Jones Industrial Average closing above 40,000 for the first time.
U.S. futures rose and oil prices rose as investors focused on the Middle East, where a helicopter carrying Iranian President Ebrahim Raisi and other officials crashed on Sunday in the mountainous northwestern region of Iran.
China’s market extended last week’s gains after the central bank announced new support for the property sector, including reducing required down payments for home loans, cutting mortgage interest rates for first and second home purchases, and removing the mortgage rate floor.
The Hang Seng in Hong Kong rose 0.7% to 19,680.31, with its property index rising 0.7% during afternoon trading. Country Garden Holdings, one of many developers in financial trouble, gained 18.5%.
The Shanghai Composite index rose 0.6% to 3,172.35.
On Monday, China’s central bank kept the key interest rate on one-year and five-year loans unchanged at 3.45% and 3.95%, in line with expectations. The one-year LPR serves as a benchmark for most new and outstanding loans in China, while the five-year rate affects the price of home mortgages.
In Tokyo, the Nikkei 225 index rose 0.7% to 39,067.45. S of Australia&P/ASX 200 gained 0.6% to 7,864.30. The Kospi in Korea rose 0.5% to 2,737.23.
Elsewhere, Taiwan’s Taiex rose 0.1% after Lai Ching-te was sworn in as Taiwan’s new president. Lai is expected to defend the island’s policy of de facto independence from China and seek to strengthen its defenses against Beijing, which claims the island as Chinese territory.
In Bangkok, the SET rose 0.1%.
On Friday, the Dow rose 0.3% to 40,003.59, a day after briefly surpassing the 40,000 level for the first time. It and other Wall Street indexes have been rising since the fall of 2022 as the U.S. economy and corporate profits have managed to hold up despite high inflation, the punishing effects of high interest rates and concerns about a recession that it seemed inevitable, but not arrived.
YOU&OP 500, which is the far more important index for Wall Street and most retirement savers, rose 0.1% to 5,303.27. It finished just 0.1% off the record set on Wednesday and capped off its fourth consecutive week of gains. The Nasdaq composite fell 0.1% to 16,685.97.
In other financial markets, Treasury yields rose.
A report last week reignited hopes that inflation is finally heading back in the right direction after a dismal start to the year. That, in turn, has revived hopes that the Federal Reserve will cut its key interest rate at least once this year.
The federal funds rate is at its highest level in more than two decades, and a cut would raise investment prices and eliminate some of the downward pressure on the economy.
The hope is that the Fed can strike a balance of slowing the economy enough through high interest rates to end high inflation, but not so much that it triggers a serious recession.
Of course, now that a growing percentage of investors are betting that the Fed will cut rates twice this year, if not more, some economists are warning that optimism may be going too far. It’s something that happens often on Wall Street.
While data reports have recently been better than expected, “better than expected does not mean good,” Bank of America economists wrote in a BofA Global Research report.
Inflation is still higher than the Fed would like, and Bank of America’s Michael Gapen still expects the Fed to hold its key interest rate steady until it cuts in December.
In the bond market, the 10-year Treasury yield rose to 4.41% from 4.38% on Thursday.
In other trading Monday, benchmark U.S. crude oil rose 30 cents to $79.88 per barrel. Brent crude, the international standard, rose 33 cents to $84.31 per barrel.
The US dollar rose to 155.75 Japanese yen from 155.55 yen. The euro rose to $1.0882 from $1.0871.
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