Global stocks rise as US data ease rate fears but fuel economic worries

Asian markets experienced a mostly positive trend on Monday, with stocks climbing following a drop on Wall Street. Traders assessed fresh data that tempered hopes for an imminent US interest rate hike but highlighted weaknesses in the world's largest economy. The Federal Reserve's potential to maintain rates steady in September bolstered equities, pushing the S&P 500 and Nasdaq to new highs.

Data released on Friday, however, raised concerns about the health of the US economy, prompting investors to consider the consequences of their desires. Retail sales declined by 0.6% on a month-over-month basis in July, marking the worst performance in over a year. Consumer sentiment plummeted as households, burdened by the fallout from the US-Iran conflict, reduced spending and anticipated higher inflation.

Payrolls data at the beginning of the month was followed by consistent inflation, softer retail sales, and weaker consumer sentiment, according to Fawad Razaqzada from Forex.com. These combined indicators suggest a possible slowdown in US economic momentum, increasing the likelihood of the Federal Reserve keeping interest rates unchanged in September.

The chances of a Fed hike are now estimated at one in four, down from 50:50 last week, as per Bloomberg. This week, investors will closely monitor earnings releases from retail giants Walmart, Home Depot, and Target, which could provide further insight into consumer sentiment. Despite growing concerns about the US economy, Asian investors remain optimistic for now, with tech companies benefiting from a rebound following July's sell-off.

In Hong Kong, tech giants Alibaba, Tencent, and JD.com led the market gains, while Shanghai and Taipei also experienced positive movements. Tokyo advanced as chipmaker Kioxia surged more than 15%, and SoftBank, Advantest, and Tokyo Electron increased by 1.6% to 2.6%. Key markets, including Tokyo, Hong Kong, Shanghai, London, and Tokyo, all saw gains, while Sydney, Wellington, Mumbai, and Manila experienced slight declines.

Seoul was closed for a holiday, and Paris remained flat. The dollar experienced losses against its counterparts after dropping on Friday in response to the latest data. Oil prices fell after a 1% increase on Friday as tensions between the US and Iran continued without a resolution. Iran has vowed to maintain its blockade of the Strait of Hormuz, while the US remains committed to asserting control over the vital energy waterway.

Analysts warn that the ongoing crisis could persist, keeping oil prices elevated and exerting pressure on inflation.