Asian equities started the week on a broadly positive note, with technology stocks leading gains across several major markets. Investors continued to assess the outlook for U.S. interest rates while turning their attention to upcoming Chinese economic figures and ongoing disruptions in the oil market.
Market sentiment has also been influenced by developments around the Strait of Hormuz. Traffic through the key shipping route remains heavily disrupted amid continuing tensions between Iran and the United States, keeping crude oil prices elevated and adding another layer of uncertainty for investors.
U.S. equity futures were relatively firm during Asian trading. Nasdaq 100 futures added around 0.3%, while S&P 500 futures were little changed. Recent U.S. economic figures have encouraged markets to scale back expectations for another Federal Reserve rate increase in the near term.
U.S. retail sales declined 0.6% in July, marking their largest monthly drop in more than a year. Market pricing now indicates approximately a 25% probability of a September Fed rate hike, compared with about 50% a week earlier. The U.S. two-year Treasury yield was around 4.15%.
Japan Growth Falls Short of Expectations
Japanese stocks remained relatively resilient despite weaker-than-expected economic growth.
The Nikkei 225 gained about 0.2%, while the broader TOPIX declined 0.6%. Japan’s economy expanded at an annualized rate of 1.1% during the second quarter, below economists’ expectations of approximately 2%.
The slowdown was partly linked to weaker domestic demand. Private consumption declined for the first time in eight quarters, while business investment also contracted.
Exports provided some support, particularly from demand for hybrid vehicles and semiconductor-related products associated with the global artificial-intelligence investment cycle.
The weaker growth figures could provide the Bank of Japan with additional flexibility regarding the timing of future monetary-policy tightening. However, persistent inflation and rising import costs remain important risks.
Technology Stocks Lead Gains
Technology shares were among the strongest performers in Japan.
Kioxia Holdings jumped 7.6%, while LARGAN Precision gained 10%. TDK also moved higher.
The strength in technology stocks extended into mainland China. Semiconductor companies posted notable gains, with Cambricon Technologies rising 5%, Semiconductor Manufacturing International Corporation climbing 7.1%, and Foxconn Industrial Internet advancing 1.4%.
Alibaba also gained around 1.5%.
The Chinese technology sector has remained closely watched as investors assess the country’s ambitions in artificial intelligence, semiconductor manufacturing and other advanced technologies.
Alibaba also attracted attention following reports that the company is considering a sale of its gaming business, Lingxi Games, in a transaction that could value the unit at more than $1.5 billion.
China Markets Rise Ahead of Economic Data
Chinese equities also started the week higher.
The CSI 300 increased about 0.8%, while the Shanghai Composite added a similar amount. Hong Kong’s Hang Seng Index performed even better, gaining approximately 1.5%.
Investors are now waiting for China’s July economic data for additional clues about the strength of the world’s second-largest economy.
Economists are expecting industrial production growth to slow to approximately 4.8%, compared with 5.3% previously. Retail sales are forecast to increase around 1.5%.
The figures could influence expectations for China’s economic-support measures and provide further insight into consumer demand and industrial activity.
Australia Stocks Decline as Earnings Take Center Stage
Australian equities moved lower, with the S&P/ASX 200 falling approximately 0.4%.
Corporate earnings were responsible for several significant individual stock movements.
JB Hi-Fi came under pressure after the retailer reported weaker July sales and issued a softer outlook.
National Australia Bank also declined, despite reporting cash earnings of approximately A$1.83 billion, representing growth of around 2%. The bank pointed to weaker housing-market activity, including declining home-loan applications and particularly soft investor lending.
NAB shares fell roughly 3.5%.
Elsewhere in the region, India’s Nifty 50 was broadly unchanged, while Singapore’s Straits Times Index declined around 0.6%. South Korean markets were closed for a public holiday.
Oil Prices Remain in Focus
Energy markets continue to represent a major source of uncertainty for Asian investors.
Brent crude was trading near $88.50 a barrel after gaining roughly 6% during the previous week. U.S. crude was around $82.12.
The continued disruption to tanker movements through the Strait of Hormuz has raised concerns about potential supply constraints. Diplomatic tensions between Iran and Washington remain unresolved, leaving investors focused on whether shipping activity through the strategic waterway will normalize.
Higher oil prices could put additional pressure on inflation, transportation costs and consumer spending if the disruption continues.
What Investors Are Watching
The direction of Asian markets in the coming sessions will likely depend on several major factors:
- China’s July economic indicators
- Expectations for the Federal Reserve’s next policy decision
- Further developments surrounding the Strait of Hormuz
- Movements in crude oil prices
- Continued strength in semiconductor and AI-related stocks
- Corporate earnings across the Asia-Pacific region
For investors, the combination of softer U.S. economic data, strong technology-sector demand and renewed energy-market risks is creating a mixed but closely watched backdrop for global markets.