Asian stock markets rise across the board on Jackson Hole breeze and expectations for Chinese tech stocks

Chinese stock market expected to reach highest level since mid-2022

US stock futures slightly down amid anticipation for this week's Nvidia earnings

Driven by positive sentiment from Jackson Hole and expectations regarding Chinese internet company policies, Chinese stocks showed strength, leading Asian stock markets to rise across the board.

On the 25th (local time), Asian markets saw a broad rally after Jerome Powell hinted at a September rate cut during the Jackson Hole meeting in the United States.

On this day, the CSI300, a large-cap index of the Shanghai Stock Exchange in China, rose 1.5%, reaching its highest point since mid-2022. The Hong Kong Hang Seng Index also climbed 1.83%.

Despite continued weak domestic demand, Chinese authorities announced new pricing regulations for internet operators, prompting tech stocks to surge. The Chinese index has gained nearly 10% this month on the back of ample liquidity.

Japan's Nikkei 225 advanced by 0.4%, South Korea's KOSPI climbed 1.13%, and Taiwan's TAIEX jumped a notable 2.16%.

The broadest MSCI index of Asia-Pacific shares excluding Japan rose by 1.5% on the day.

Following Powell's remarks last Friday, the 10-year U.S. Treasury yield, which had fallen sharply by 7 basis points (1bp = 0.01%), remained stable at 4.268% in the Asian session.

However, as expectations for a Fed rate cut waned, European and U.S. stock futures returned to a more cautious tone.

In particular, the U.S. market faced heightened concerns about the impact of tariffs on inflation and corporate earnings ahead of the upcoming Personal Consumption Expenditures (PCE) release this week.

S&P 500 futures declined by 0.1%, Nasdaq 100 futures by 0.2%, and Dow Jones Industrial Average futures also dropped 0.2%.

The broad Stoxx Europe 600 index dipped by 0.26% at 10 a.m. London time, reflecting a mild downtrend across European markets.

Denmark's renewable energy firm Ørsted plunged nearly 17% after the Trump administration halted construction of an almost-completed offshore wind farm.

At last Friday's Jackson Hole meeting, Federal Reserve Chair Jerome Powell adopted a dovish tone, boosting predictions of a September rate cut in the interest rate futures market.

According to the FedWatch tool by CME Group, current market expectations put the likelihood of a 0.25% rate cut in September at 87%, up from 75% before Powell's speech.

There has also been a rise in forecasts that the benchmark rate could fall by up to 100 basis points (1bp = 0.01%) by mid-next year, from the current 4.25%~4.5% to 3.25~3.5%.

The strengthening of the rate cut outlook is seen as a sign that forecasts for improved U.S. corporate earnings are growing, thanks to lower Treasury yields and a weaker dollar, while there are rising concerns about employment and a U.S. economic slowdown.

Bruce Kasman, Head of Global Economic Research at J.P. Morgan, noted, "Expectations have increased that the Fed will ease monetary policy in response to reduced labor demand; at the same time, projections for a slowdown in global economic growth this quarter have also strengthened."

On Wednesday the 27th, Nvidia, the world's most valuable company, will announce its earnings. According to Wall Street consensus, Q2 revenue is expected at $45.9 billion (approx. ₩63.7 trillion), with EPS forecast to rise 48%.

Options markets predict share price swings of up to 6% in either direction depending on the results. With a market cap exceeding $4 trillion and representing 8% of the S&P index, Nvidia's performance is expected to have a significant impact on the index.

The U.S. Personal Consumption Expenditures (PCE) index, to be published on the 29th, will likely put market optimism to the test. The core PCE, which the Fed closely monitors, is forecast to climb to 2.9%, the highest since the end of 2023.

An unexpected rise in inflation could challenge the recent rally in long-dated Treasuries. This week, the U.S. Treasury plans to sell $183 billion in bonds.

Junga Kim, Guest Reporter kja@hankyung.com