Global markets opened the week with interest rates, technology shares and oil prices driving positioning.
Expectations for a September Federal Reserve rate increase fell to around 30%, down from roughly 50% a week earlier, after weaker US retail sales and softer consumer sentiment. The change reduced immediate pressure on equity valuations and pushed bond yields lower.
Nasdaq futures rose around 0.5%, while S&P 500 futures gained approximately 0.2%. European equities were broadly steady, with the STOXX 600 edging higher as resources shares benefited from stronger gold prices.
US Treasury yields also declined. The two-year yield fell to around 4.15%, while the ten-year yield moved down to approximately 4.69%. Lower yields improve the valuation backdrop for growth shares, particularly technology companies, although the Federal Reserve’s next decision will still depend on incoming economic data.
The US dollar weakened as rate expectations shifted. The euro climbed to a two-month high near $1.1595, while the Australian and New Zealand dollars reached their strongest levels in around ten weeks. Currency moves now add another factor for globally exposed companies, particularly those with international revenues or dollar-based costs.
Asian markets were led by gains in Chinese and Hong Kong technology shares. The CSI 300 rose more than 1.3%, the Shanghai Composite gained around 1%, and Hong Kong’s Hang Seng advanced nearly 2%.
Semiconductor companies were among the strongest performers. SMIC and Cambricon Technologies moved higher, while Alibaba also gained.
Alibaba drew additional attention following reports that it was seeking to sell its Lingxi Games business in a deal that could value the unit at more than $1.5 billion. A sale would further streamline the group’s portfolio and could give management more flexibility to direct capital towards higher-priority areas.
Chinese economic data is the next major test. July industrial production growth is expected to slow to 4.8% from 5.3%, while retail sales are forecast to rise by 1.5%. The figures will give markets a clearer view of domestic demand and industrial activity, with direct implications for Chinese consumer, manufacturing and technology companies.
Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.
