Asian Markets Surge Following U.S. Optimism and Strong Chinese Manufacturing Data

News Summary: Asian stock markets increased on Monday, buoyed by positive indicators from Wall Street and unexpected growth in China's manufacturing sector.

　　Lead: Asian stock markets, including Japan's Nikkei and Australia's S&P/ASX 200, traded mostly higher on Monday following an upbeat performance on Wall Street last Friday, fueled by a surprise expansion in Chinese manufacturing activity and hopes that the U.S. Federal Reserve may hold interest rates steady later this month.

　　Main Body:

　　Asian stock markets opened the week on a positive note on Monday, October 2, 2023, influenced by strong signals from Wall Street. The previous Friday, the Dow Jones Industrial Average gained 115.80 points (0.3%) to close at 34,837.71, while the S&P 500 rose by 8.11 points (0.2%). In contrast, the tech-heavy Nasdaq experienced a slight decline of 3.15 points.

　　Market analysts are attributing the upswing in Asian markets to revised optimism surrounding the world's second-largest economy, particularly after data indicated unexpected growth in Chinas manufacturing sector for August. The Financial Times reported that the Caixin PMI for manufacturing rose to 51.3, denoting expansion (a score above 50 reflects growth), showcasing a recovery from previous months where the outlook was much gloomier.

　　Economic indicators also reflected a rise in unemployment rates in the U.S., amplifying expectations that the Federal Reserve will maintain interest rates in its upcoming meeting later this month. Bill Adams, chief economist for Comerica Bank, remarked, “An uptick in the unemployment rate and moderation of payroll and wage growth mean the Fed is very likely to hold their policy rate steady at the decision later this month.”

　　Despite this optimism, uncertainty remains regarding future Fed meetings. Current data from the CME Group's FedWatch tool indicates a 93% probability that the Fed will not change rates in the immediate term, yet a 34.3% chance lingered for a potential October rate hike should inflation or economic growth surprise to the upside.

　　Australias stock market displayed a remarkable recovery on Monday, with the S&P/ASX 200 overcoming losses from the previous session, moving above the 7,300 level. The index showcased a gain of 32.20 points (0.44%) to reach 7,310.50, shortly after trading at a peak of 7,340.90. The All Ordinaries Index (broad market index) also climbed by 27.60 points (0.37%) to 7,517.50.

　　Among the major Australian miners, Rio Tinto gained nearly 2% while BHP Group climbed by more than 2%. Other mining stocks like Fortescue Metals and Mineral Resources reported gains exceeding 3% each, buoyed by rising commodity prices. In the oil sector, notable performances were recorded, with Woodside Energy gaining over 1% and Santos advancing 1.5%.

　　In the technology sector, Block, the owner of Afterpay, rose more than 1%, alongside other tech companies such as Appen and Xero. Conversely, gold miners showed a mixed performance, with Northern Star Resources and Resolute Mining advancing while Evolution Mining and Gold Road Resources posted slight declines. The major Australian banks generally reported gains, with Commonwealth Bank rising nearly 1%.

　　Additionally, Liontown Resources‘ shares surged by over 9% following the announcement of a $6.6 billion takeover offer from U.S. company Albemarle. Contrarily, SkyCity Entertainment’s stock plummeted almost 17% after it disclosed that its license in New Zealand could face suspension due to compliance shortcomings.

　　The Japanese stock market also kept pace with the positive trend, as the Nikkei 225 index rose by 189.37 points (0.58%) to close the morning session at 32,899.99, following recent strong performances. The Japanese index has seen significant gains over the past sessions, bolstered by resource-related stocks due to rising commodity prices. Automakers like Honda and Toyota gained 1.5% and 2% respectively, amidst a backdrop of mixed performances for the countrys major exporters.

　　However, the Hong Kong market showed a slight decline, with the Hang Seng Index experiencing a 0.35% fall. China's Shanghai Composite Index also reflected a minor decrease, down 0.16%.

　　In the broader Asian markets, shares in Hong Kong and mainland Chinese markets increased by 2.7% and 1.3%, respectively. Singapore, South Korea, Taiwan, and Indonesia also reported steady improvements, ranging from 0.3% to 0.5%. Yet, New Zealand's stock market bucked the trend with a modest 0.3% dip.

　　As the U.S. equities strategize their next move, investors are focused on upcoming economic data releases that might influence central bank policies, including job growth reports and construction spending metrics. Key indicators to watch include the Federal