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Asian stock markets moved higher on Monday, following record gains on Wall Street as weaker U.S. employment data reduced expectations for an imminent Federal Reserve interest rate hike. Oil prices also advanced as uncertainty over shipping through the Strait of Hormuz continued.
Brent crude rose 1.0% to $84.40 a barrel, while U.S. crude gained 0.8% to $78.80. Iran said an agreement with Oman establishing new shipping lanes in the Strait of Hormuz was nearing completion, although Tehran maintained that the key waterway would not fully reopen until the United States met additional conditions.
Higher energy costs have increased attention on the U.S. July Consumer Price Index report due Wednesday. Economists expect headline CPI to rise 0.1%, with core inflation forecast at 0.2%. A stronger-than-expected reading could revive expectations that the Federal Reserve will raise interest rates in September.
Fed rate hike expectations have already declined sharply, with futures markets pricing roughly a 44% probability of a September move, down from 67% a week earlier.
Lower rate expectations supported U.S. Treasuries and helped Wall Street finish Friday at record highs. Japan’s Nikkei climbed around 2%, South Korea’s Kospi gained more than 1%, and MSCI’s Asia-Pacific index excluding Japan advanced approximately 0.8%.
Chinese blue-chip stocks bucked the regional trend, falling about 0.4% after July consumer and producer inflation figures missed forecasts, reinforcing concerns about weak domestic demand.
U.S. corporate earnings remained another source of market optimism. With nearly 90% of S&P 500 companies having reported, Bank of America analysts said earnings per share increased 30% year-over-year when certain investment gains at Alphabet and Amazon were excluded. AI-related companies recorded median EPS growth of 28%, compared with 12% for non-AI stocks.
Meanwhile, the U.S. dollar remained under pressure following the decline in Treasury yields. The euro traded near a seven-week high around $1.1554, while the dollar strengthened slightly against the yen to 158.23.
Gold held near $4,320 an ounce after surging more than 7% last week, supported by lower bond yields and expectations for a less aggressive Federal Reserve policy outlook.
