Stock Markets in China Anticipated to Commence Trading in a Positive Mood on Tuesday
The Asian stock markets are expected to open higher on Tuesday, driven by optimism about a potential Federal Reserve interest rate cut and active bargain hunting by investors. This positive sentiment reflects increased risk appetite amid expectations of easing monetary policy.
The Chinese stock market, in particular, shows strong momentum. Major indices such as the Hang Seng are expected to see notable gains, supported by a resurgence in investor confidence in the $11 trillion market. The broader Asian markets also benefit from easing trade tensions and the near certainty of a 25 basis point Fed rate cut, which fuels buying interest across sectors.
Australian markets are also expected to play a supportive role, with recent employment data contributing to market optimism in the region. However, some markets like the Nikkei may open with slight softness, but the overall regional tone remains positive due to global cues.
The Shenzhen Composite Index added 17.07 points or 0.78 percent on Monday, ending a two-day losing streak in the Chinese stock market. The Shanghai Composite Index (SCI) finished modestly higher, collecting 23.36 points or 0.66 percent.
Industrial and Commercial Bank of China increased by 0.79 percent, while China Merchants Bank expanded by 1.08 percent. However, shares of Amazon (AMZN) slumped during the sell-off.
The weaker than expected jobs data also contributed to the sell-off. West Texas Intermediate crude for September delivery was down $1.06 or 1.57 percent at $66.27 per barrel on Monday. Crude oil continued to decline on Monday due to oversupply concerns and fears of a tariff-induced slowdown by the global economy.
The steep drop last Friday was due to concerns about the economic impact of President Donald Trump's new tariffs. The NASDAQ and S&P 500 pulled back from their record highs due to a recent sell-off.
According to CME Group's FedWatch Tool, the chances of a quarter point rate cut in September have jumped to 91.9 percent. This optimism about the Federal Reserve lowering interest rates next month has contributed to buying interest.
The global forecast for the Asian markets remains positive, with the SCI expected to see additional support on Tuesday. The overall regional tone remains upbeat, fueled primarily by interest rate cut expectations from the Fed and bargain hunting, with strong performance especially anticipated in China and supported by favorable macroeconomic conditions across the region.
Investors are heavily investing in the Asian business sector, especially the Chinese market, buoyed by the prospect of a Federal Reserve interest rate cut and optimism about macroeconomic conditions in the region. The Chinese stock market, such as the Hang Seng and Shenzhen Composite Index, is showing strong momentum and expected to see notable gains on Tuesday.
