Asian stocks experienced a remarkable month of July, with several key indices recording substantial gains. China’s CSI 300 and the Hang Seng both increased by 4.5% and 6.1%, respectively, marking their largest monthly percentage increases since January. Similarly, MSCI’s index of Asia Pacific shares outside of Japan saw a significant surge of 5.3%, its best performance in six months. However, Japan’s Nikkei 225 remained relatively unchanged throughout the month. Despite China’s weak factory and services data, investors focused on Beijing’s latest efforts to boost consumption and stimulate post-COVID demand. As a result, Japan’s Nikkei 225 reached a four-week high, while the benchmark Japanese government bond yield rose to its highest level in nine years.
Looking ahead, Australia’s central bank is expected to join the global trend of raising policy rates on Tuesday by implementing a 25 basis points hike. In the United States, all three major stock indexes mirrored the modest gains seen in Asian markets, potentially encouraging further growth as August begins. Traders are paying particular attention to heavy equipment manufacturer Caterpillar Inc., whose upcoming earnings report will provide insight into the global demand outlook.
On Tuesday, the Institute for Supply Management will release the manufacturing Purchasing Managers’ Index (PMI) for July, and the Labor Department will publish the Job Openings report for June. These reports are expected to shed light on how the Federal Reserve’s restrictive monetary policy is impacting the world’s largest economy.
Several other key developments could influence market direction on Tuesday. Australia’s Reserve Bank will announce its policy rate decision, while S&P Global will release India’s manufacturing PMI for July. Additionally, South Korea’s consumer price index (CPI) data for July will be published.
In summary, Asian stocks enjoyed a fruitful month of July, with China and the Asia Pacific region experiencing substantial gains. Despite Japan’s stagnant performance, positive sentiment surrounding Beijing’s efforts to revive demand has boosted investor confidence. As August begins, traders will be watching for Australia’s central bank rate decision and closely examining key economic reports from the United States. These factors, along with additional developments in India and South Korea, will likely shape market trends on Tuesday.
