Asian stock markets kicked off the week on a positive note Monday, buoyed by Wall Street's recovery from a three-day slump, which helped curb weekly losses and reignited investor optimism across the region.
While eyes turn to key economic releases—China's factory activity data on Tuesday and Japan's quarterly business sentiment survey on Wednesday—traders are also bracing for potential U.S. turbulence. A government shutdown looms as a deadline approaches this week, though past political standoffs have rarely derailed markets significantly. Adding to the mix, upcoming U.S. jobs figures could sway sentiment further.
U.S. futures pointed modestly upward in early trading, signaling continued momentum, while oil prices dipped amid supply concerns. Tokyo's Nikkei bucked the trend, sliding 1% to close at 44,892.52, weighed down by domestic factors. In contrast, Hong Kong's Hang Seng soared 1.5% to 26,518.03, and Shanghai's Composite edged up 0.1% to 3,832.65, reflecting cautious optimism in Chinese markets. Australia's S&P/ASX 200 climbed 0.7% to 8,545.70, and South Korea's Kospi jumped 1.3% to 3,430.57.
The upbeat Asian session followed a resilient Friday on Wall Street, where stocks pared weekly declines after inflation data aligned with expectations. The S&P 500 advanced 0.6% to 6,643.70, the Dow Jones Industrial Average rose 0.7% to 46,247.29, and the Nasdaq Composite gained 0.4% to 22,484.07—all inching back toward record highs set earlier in the week.
A key driver was the latest inflation reading, which showed U.S. prices accelerating slightly to 2.7% last month from 2.6% in July, per the Federal Reserve's preferred gauge. Though above the Fed's 2% goal, the figure matched economist forecasts, easing fears of hotter-than-expected pressures. This fueled hopes for sustained interest rate cuts to support economic growth, countering growing murmurs that rapid stock gains have inflated valuations unsustainably.
The Fed's recent first rate reduction of the year offered a lifeline, but officials remain cautious, warning that further easing risks stoking inflation anew. A separate University of Michigan survey revealed softer-than-anticipated consumer sentiment, with high prices frustrating households—yet inflation expectations for the next year eased marginally to 4.7% from 4.8%.
Complicating the outlook, President Donald Trump's latest tariff announcements late Thursday targeted imports of pharmaceuticals, kitchen cabinets, bathroom vanities, upholstered furniture, and heavy trucks, effective October 1. Details were light, as is typical for his social media declarations, leaving analysts grappling with potential impacts. The news stirred modest ripples rather than waves in U.S. equities: Truck maker Paccar surged 5.2%, while pharma giants Eli Lilly and Pfizer climbed 1.4% and 0.7%, respectively.
In commodities, U.S. benchmark crude tumbled 49 cents to $65.23 per barrel, with Brent crude shedding 42 cents to $68.80. Analysts attributed the slide to reports that OPEC+ may hike production quotas next month, heightening oversupply fears.
Currency markets saw the U.S. dollar weaken to 148.93 yen from 149.51 yen, while the euro strengthened to $1.1727 from $1.1703. As global investors navigate these crosscurrents, the week ahead promises volatility, with Asia's rebound underscoring resilience amid U.S.-centric uncertainties.