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Most Asian stocks experienced a significant surge on Monday, driven by weaker-than-expected U.S. payrolls data, which bolstered expectations of the Federal Reserve concluding its rate hike cycle. Additionally, investors turned their attention towards upcoming economic indicators from China. This rally in regional stocks commenced on Thursday, following the Fed's less hawkish stance than initially anticipated, heightening anticipation of a halt to further rate hikes.
The Friday release of the weaker-than-expected nonfarm payrolls data played a pivotal role in solidifying this perception. The data signaled a slowdown in the U.S. job market, an issue that has been a major concern for the Fed.
Wall Street indexes experienced a surge after Friday's release, setting a positive tone for Asian shares on Monday. Traders began factoring in a higher probability of no more rate hikes by the Fed, and the likelihood of the central bank commencing rate reductions by mid-2024.
Notably, technology-heavy indexes displayed the strongest performance of the day, following a sustained decline in the U.S. dollar and U.S. Treasuries. South Korea's KOSPI surged by an impressive 3.8%, reaching a high not seen in over two weeks.
The KOSPI received an additional boost from the South Korean government's announcement of a complete ban on short-selling in local markets. This decision comes in the wake of the government imposing record fines on two global banks last month for engaging in naked short selling.
Japan's Nikkei 225 recorded a notable 2.2% jump, supported by data indicating stronger-than-expected growth in the country's services sector for October. The Nikkei achieved a high not seen in over a month and was poised for a fourth consecutive session of gains, following the Bank of Japan's dovish stance last week.
This week, the spotlight will also be on key corporate earnings reports from Japanese giants SoftBank Group Corp. (TYO:9984) and Sony Corp (TYO:6758).
Australia's ASX 200 saw a 0.3% rise, breaching the 7,000 level for the first time in over two weeks. Leading the charge were heavyweight bank stocks, with Westpac Banking Corp (ASX:WBC) experiencing a 3.3% increase after announcing a 26% surge in its annual profit and revealing plans for a $975 million share buyback.
