Asian stocks rise ahead of inflation data; June gains on tap

Investing.com-- Asian stocks rose on Friday and were set for strong gains in June amid some hopes that the Federal Reserve will cut interest rates this year amid a cooling U.S. economy. 

But Chinese shares largely lagged their regional peers this month, as concerns over a potential trade war with the West and doubts over an economic recovery in the country sparked steep losses in local markets. 

Asian stocks took few cues from a middling overnight close on Wall Street, as investors kept to the sidelines before key inflation data due later on Friday, which is likely to factor into the outlook for interest rates.

U.S. stock index futures rose slightly in Asian trade, as some soft economic readings this week pushed up speculation over a cooling economy. Focus was now squarely on upcoming PCE price index data, which is the Fed’s preferred inflation gauge. 

Japanese stocks rise after mixed inflation

Japan’s Nikkei 225 and TOPIX rose about 0.8% each, with the latter hitting a three-month high after a mixed consumer price index inflation reading from Tokyo.

While headline CPI was seen increasing, underlying inflation remained weak, and close to lows last seen in late-2022. Tokyo inflation usually acts as a bellwether for countrywide inflation, with Friday’s reading showing that inflation showed minimal signs of increasing. 

The Nikkei and the TOPIX were set to add 3.2% and 1.6% in June, respectively, as they recovered from a middling performance through most of the second quarter.

Broader Asian markets advanced, and were set for gains in June. Australia’s ASX 200 rose 0.4%, recovering from two straight sessions of weak losses. The index was up 1.3% this month.

South Korea, India lead June gains

South Korea’s KOSPI rose 0.2% and was up 5.9% in June, buoyed chiefly by flows into local chipmaking stocks, amid growing hype over artificial intelligence. 

Memory chip makers SK Hynix Inc (KS:000660) and Samsung Electronics Co Ltd (KS:005930) were the main beneficiaries of this trade.

India’s Nifty 50 index was trading up nearly 7% in June, having clocked a series of record highs through the month amid persistent confidence in India’s economy. Local stocks also largely shrugged off the unexpected results of the 2024 general elections, which saw the incumbent BJP party win a smaller majority.

Chinese stocks lag for June

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose about 0.8% on Friday, but were both set to lose around 3% in June. Hong Kong’s Hang Seng index added 0.6%, and was trading up over 1% in June. 

But Chinese markets lagged their regional peers this month, as concerns over a potential trade war with the west saw sentiment sour towards China. Beijing flagged the possibility of retaliatory measures over European tariffs on Chinese electric vehicle imports.

Optimism over stimulus measures from Beijing was also seen cooling through June, amid a series of mixed economic readings from the country.