Most Asian markets rose on Monday, mirroring gains on Wall Street, as US inflation figures aligned with expectations and alleviated concerns over Donald Trump’s latest tariff measures. The positive sentiment came after the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index, increased 2.7 percent in August, up from 2.6 percent in July. Although this reading exceeds the Fed’s two percent target, policymakers are focused on supporting the labor market following a series of weak jobs reports.
The Fed’s recent interest rate cut, the first since December, was motivated by a closely watched guide indicating two more cuts were likely before January. Attention is now centered on the key non-farm payrolls (NFP) report due on Friday. However, concerns are growing that the report may be postponed due to a potential government shutdown as US politicians struggle to reach a funding deal. A deadline for a deal is set for Tuesday, with congressional leaders scheduled to meet President Trump to resolve the issue.
The Democratic House leader, Hakeem Jeffries, expressed cautious optimism about reaching a deal before the Tuesday cutoff. His colleague, Chuck Schumer, the Democrats’ Senate leader, also echoed this guarded optimism, stating that any potential breakthroughs would depend on Trump’s Republicans. Economists at Bank of America warned that the longer the standoff continues, the more painful it would be for the world’s top economy.
Despite these concerns, investors in most markets were in a positive mood, building on Wall Street’s gains. Hong Kong and Seoul led the way, rising over one percent each, while Shanghai, Sydney, Singapore, Wellington, Manila, and Jakarta also advanced. Tokyo slipped, although the finance arm of Sony soared over 30 percent on its debut after being spun off by the tech titan.
Oil prices declined on speculation that OPEC+ will increase output, fueling concerns of a glut. The drop followed last week’s rally on the back of mounting tensions between NATO countries and Russia, increasing the possibility of fresh sanctions on Moscow. Key figures at around 0230 GMT included the Tokyo Nikkei 225 down 1.0 percent, the Hong Kong Hang Seng Index up 1.5 percent, and the Shanghai Composite up 0.1 percent.
The euro rose against the dollar, while the pound also gained ground. The dollar slipped against the yen, and West Texas Intermediate crude oil fell 0.8 percent to $65.19 per barrel. The positive sentiment in most Asian markets reflects the cautious optimism prevailing in the global economy, despite ongoing concerns over trade tensions and government funding. As the US government shutdown looms, investors will be closely watching the developments in Washington and their potential impact on the global economy.
