(Bloomberg) — Asian stocks advanced on Monday led by a rally in Hong Kong technology shares, while hopes of lower US interest rates pushed the region’s currencies to the highest level in five months against the greenback.
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A gauge for Asian shares rose, following its best week in over a year. Equity markets in China rose as an index for Hong Kong tech climbed over 2.5%, propelled by JD.com Inc., whose shares surged the most since June after reporting unexpectedly strong results.
Contracts for European and US equities also rose. Meanwhile, the Bloomberg Asia Dollar Index gained as much as 0.6%, while the yen soared 1%.
Monday’s activity suggests ebbing concerns of a US recession and the prospect of lower borrowing costs are lifting sentiment across the region. The major signpost for the week will be on Friday, when Federal Reserve Chairman Jerome Powell is expected to give fresh insights on the course of US monetary policy at the central bank’s annual confab in Jackson Hole.
“As the recent trading activities are short-term oriented, investors are buying to discount the US rate cut because valuation in Hong Kong looks attractive,” said Steven Leung, executive director at UOB Kay Hian Hong Kong. “Once the cut is confirmed, investors will take short term profits and sell on the good news.”
Goldman Sachs at the weekend trimmed the probability of a US recession in the next year to 20% from 25%, citing last week’s retail sales and jobless claims data. If the August jobs report set for release on Sept. 6 “looks reasonably good, we would probably cut our recession probability back to 15%,” Goldman economists led by Jan Hatzius wrote in a report to clients on Saturday.
In Asia, investors will be looking this week to central bank meetings in Indonesia and South Korea for signs of policy easing, while the Thailand decision will be crucial following reports the nation’s new prime minister may abandon a key stimulus package.
Stronger Asian currencies which have benefited from improved risk sentiment should bring faster policy rate cuts…
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