Asian stocks rise as China stimulus hopes offset glum PMIs

Investing.com -- Most Asian stocks rose on Monday, extending last week’s rally as optimism over more Chinese stimulus measures largely offset data showing business activity in the country deteriorated further in July.

Hopes of fewer U.S. interest rate hikes also aided regional markets, after data on Friday showed that the Federal Reserve’s preferred inflation gauge eased in June.

Japanese stocks were the best performers in the region, rebounding sharply from losses on Friday as the Bank of Japan (BOJ) carried out an unscheduled bond-buying operation to help stem a spike in yields.

The Nikkei 225 rose 1.4%, while the broader TOPIX added 1.3%, with both indexes now moving back towards their 30-year peaks. Japanese stocks rose even as data showed that industrial production grew less than expected in June, while large retailers' sales fell.

Chinese stocks rise as stimulus bets offset weak PMIs

Chinese markets firmed on Monday as the State Council outlined more measures to boost domestic consumption and economic growth.

The Council unveiled measures aimed chiefly at increasing retail discretionary spending, as well as supporting the real estate and automobile markets.

China’s Shanghai Shenzhen CSI 300 index rose 0.8%, while the Shanghai Composite added 0.6%. Gains in Chinese stocks saw Hong Kong’s Hang Seng index surge 1.6%, as the council also unveiled measures intended to support the country’s biggest tech companies.

But bigger gains were held back by data showing that China’s manufacturing sector shrank for a fourth straight month in July, while broader business activity also deteriorated.

The readings indicated that the Chinese economy was still struggling after a weak third quarter, and that more policy support was needed to boost Asia’s largest economy.

Other China-exposed Asian stocks advanced on Monday, with South Korea’s KOSPI up 0.8%, while most Southeast Asian markets rose.

On the other hand, futures for India’s Nifty 50 index pointed to a weak open, as investors collected profits after a string of record highs through July.

Australian stocks flat amid RBA uncertainty

Australia’s ASX 200 index traded sideways on Monday, as investors hunkered down before a Reserve Bank of Australia meeting on Tuesday.

Markets are split over whether the bank will hike rates further. While inflation has recently eased in the country, it still remains well above the RBA’s 2-3% annual target.

Recent data also showed that the labor market remains strong, which could keep inflation sticky in the coming months, inviting more hikes from the central bank.