Global Risk-On Rally Extends as Asia Stocks Gain: Markets Wrap

(Bloomberg) — Asian shares extended the rally in global equities on positive momentum from Wall Street and signs of moderating US inflation. The yuan gained after China set a stronger-than-expected fix for the currency.

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Equities in Shanghai rose more than 1% while Hong Kong-listed technology companies jumped over 3%. Shares of Asian electric-vehicle makers and related suppliers also climbed, benefiting from Tesla Inc. and BYD Co. setting sales records in the second quarter.

Japan’s Topix index was on course for another gain that has the index repeatedly setting highs last seen in mid 1990 amid improved confidence among big manufacturers.

The gains in Chinese stocks Monday contrast with the 6% drop in MSCI Inc.’s China Index in the first half. While many investors remain wary of policy risks and China’s tepid economic rebound, some are pointing at attractive valuations.

“We’re still positive on the market, mainly from a risk-reward perspective,” James Wang, head of China strategy at UBS Group AG’s investment research unit, said on Bloomberg Television. “The market’s still trading one standard deviation cheap relative to history, two standard deviations cheap relative to the rest of the world.”

Euro Stoxx 50 contracts gained, while futures the S&P 500 were flat and those for the Nasdaq 100 edged up. The US tech index rose almost 2% last week and notched its best ever first-half of a year. The S&P 500 reached the highest since April 2022 and posted its best first half since 2019, with Apple Inc. hitting the $3 trillion milestone along the way.

Traders were encouraged as data showed inflation is moderating, even if that comes at the expense of growth. The personal consumption expenditures price index, one of the Federal Reserve’s preferred inflation gauges, rose 0.1% in May. From a year ago, the measure stepped down to 3.8%, the smallest annual advance in more than two years.

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This kept action in the bond market subdued during the US session Friday and again on Monday in Asia, after what was an eventful first…


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