Asian stocks rise with Nikkei at record highs, China lags on trade fears

Investing.com-- Most Asian stocks rose on Tuesday amid growing bets on lower U.S. interest rates, with Japan’s Nikkei 225 index hitting a record high, while Chinese markets lagged on persistent concerns over a trade war.

Regional markets took some positive cues from Wall Street indexes, as strength in technology stocks helped the S&P 500 and the NASDAQ Composite eke out record highs.

U.S. stock index futures drifted higher in Asian trade, with focus squarely on a two-day testimony by Federal Reserve Chair Jerome Powell beginning later in the day. Investors were holding out for dovish cues from Powell after a swathe of recent readings showed some cooling in U.S. inflation and the labor market.

U.S. consumer price index inflation data is also on tap this week. 

Growing expectations of interest rate cuts by the Fed boosted Asian markets in recent sessions. Markets were seen pricing in a greater chance for a cut in September.

Japan’s Nikkei hits record high on tech gains, foreign buying 

The Nikkei 225 index was the best performer in Asia on Tuesday, rising over 1% to a record high of 41,421.50 points. The broader TOPIX index rose 0.4% and was in sight of a record high hit last week. 

Technology stocks, especially chipmakers, were the biggest boost to the Nikkei, as they tracked gains in their U.S. peers on hype over artificial intelligence. Weakness in the yen, which was near a 38-year low, also boosted export stocks.

Foreign buyers were a key driver of recent gains in Japanese markets, as a mix of yen weakness and a dovish outlook for the Bank of Japan drew in capital.

Expectations of major corporate reforms in Japanese companies, which are expected to see them prioritize shareholder returns, also made local markets appear more attractive. 

Still, doubts persisted over just how much higher Japanese stocks will push, given that the economy was struggling with weak consumption and sticky inflation. 

Other Asian markets also rose. Gains in tech helped South Korea’s KOSPI add 0.4%, while Australia’s ASX 200 surged 0.7% as it rebounded from two days of losses. A private survey showed Australia’s consumer sentiment worsened in early-July amid persistent concerns over inflation and high interest rates. 

Futures for India’s Nifty 50 index pointed to a mildly positive open, with the index and the BSE Sensex 30 remaining in sight of recent record highs. 

Chinese stocks lag on trade jitters, econ data awaited 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.2% and 0.4%, respectively, while losses in mainland stocks dragged Hong Kong’s Hang Seng down 0.4%.

Sentiment towards China remained strained after the European Union imposed steep tariffs on the import of Chinese electric vehicles. Markets were watching for any retaliation from Beijing, especially as officials flagged the possibility of a trade war over the tariffs.

Chinese stocks largely lagged their peers through June as optimism over an economic rebound in the country wore thin amid middling economic readings. Focus this week is on trade and inflation readings from China for more cues on the country.