Stocks in Asia surged on Monday, driven by strong performances from some of the world’s largest technology companies. Taiwan Semiconductor Manufacturing Co. saw a 6.2% increase, while SK Hynix Inc. climbed 5%. The Nikkei-225 Stock Average in Japan surpassed 40,000 for the first time, and South Korea’s Kospi index rose by 1.5%.
The rally in Asia followed a strong performance by US technology stocks on Friday. “The Nikkei 225’s 40,000 is certainly a key psychological level, which could offer some resistance for the index and bring volatility,” said Charu Chanana, a strategist at Saxo Capital Markets in Singapore. “But when structural factors remain in favor, and yen weakness continues, it is likely to be more a bullish signal rather than fueling any concerns of Japanese stocks being overbought.”
However, Chinese stocks edged lower as investors awaited the start of the 14th National People’s Congress in Beijing. The focus is on potential stimulus measures to support the country’s soft economy. Despite recent efforts to boost confidence, including a cut to key mortgage rates and encouraging state funds to buy shares, concerns remain about a property crisis and a $7 trillion stock rout.
Meanwhile, oil prices steadied near the highest level of the year after OPEC+ extended its production cuts. US crude traded around $80 a barrel in Asia, maintaining the level it reached for the first time in almost four months on Friday.
In the currency markets, Treasury yields in Asia rose slightly after a decline on Friday following weaker-than-expected economic data and cautious comments from Federal Reserve officials. The dollar traded in tight ranges against its peers, while the South Korean won strengthened to its highest level in a week.
Looking ahead, investors will be closely watching Federal Reserve Chairman Jerome Powell’s congressional testimony this week, as well as key economic data releases. The stock market rally is showing little signs of slowing down, with US corporate earnings growing nearly 8% in the fourth quarter. Analysts are also keeping an eye on the artificial intelligence sector, which has been driving a stock market rally that has exceeded expectations.
Overall, the outlook for global markets remains positive, with Bank of America raising its forecast for the S&P 500 to 5,400 by year-end. Traders will also be monitoring events such as Tokyo inflation data, Australian growth figures, and a policy decision from the European Central Bank this week.
