Hang Seng Index, Nikkei Index, ASX 200: Markets Up on Rate Cut Bets and China

On Friday, US 10-year Treasury yields fell by 1.43%, and this downward trend continued into Monday, with an additional decline of 0.20% during the early Asian session.

On Monday, the US futures were in positive territory, with Dow mini and Nasdaq mini gaining 77 and 36 points, respectively. The S&P 500 min was up 9 points. On Friday, the Nasdaq Composite Index slipped by 0.01%. The Dow and the S&P 500 advanced by 1.51% and 0.80%, respectively.

Furthermore, investor expectations of an ECB rate cut on Thursday (June 6) drove buyer demand for riskier assets. An ECB rate cut would signal the beginning of a cycle of monetary policy easing.

China Caixin Manufacturing PMI Beats Forecasts

Economic data from China eased immediate fears of a slowdown in the demand environment. The Caixin Manufacturing PMI increased from 51.4 to 51.7 in May. Economists forecast a PMI of 51.5. According to the May survey,

Production rose at the most marked pace since June 2022.
New domestic and overseas orders increased, though slower than in April 2024.
The upward trend in new orders drove backlogs higher, though firms remained cautious about increasing headcounts.
Input price inflation was the highest since October 2022, with some firms passing costs onto their clients.
Optimism across the manufacturing sector improved in May 2024.

Hang Seng Index Leads the China Equity Markets Higher

On Monday (June 3), the CSI 300 and the Shenzhen Composite Index advanced by 0.23% and 0.34%, respectively. The better-than-expected manufacturing PMI numbers from China contributed to the gains. The Hang Seng Index rallied 2.36% through the morning Asian session.

The tech and real estate sectors supported the early gains. The Hang Seng Mainland Properties Index (HSMPI) and Hang Seng Tech Index (HSTECH) gained 2.94% and 2.86% in the morning session.