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Asian Stocks Gain as Tech Sector Strength Offsets Fed Concerns; China Leads Surge

On Monday, most Asian stocks climbed, buoyed by robust gains in technology shares mirroring the strong performance of their Wall Street counterparts. Additionally, Chinese markets surged following the government’s announcement of further relaxation of property market restrictions.

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Despite concerns regarding potentially prolonged U.S. interest rate hikes, regional markets largely shrugged off these worries in the wake of strong inflation data released last week. However, apprehensions are anticipated to escalate as the Federal Reserve’s meeting approaches later this week.

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The technology sector emerged as the day’s top performer, following a robust session on Wall Street last Friday fueled by stellar earnings from Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc (NASDAQ: GOOGL). Consequently, U.S. stock index futures saw an uptick in Asian trading on Monday.

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The resilience of the tech sector helped mitigate concerns over persistent U.S. inflation, setting the stage for possible hawkish signals from the upcoming Federal Reserve meeting later this week. Nonetheless, anticipation surrounding the meeting is expected to temper gains in Asian markets.

In China, both the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes recorded gains of 1.3% and 0.8%, respectively, outperforming many of their regional counterparts. The upswing was largely driven by surges in property stocks following the government’s announcement of measures to ease home purchase restrictions across major cities, aimed at revitalizing the sluggish property market, a crucial pressure point for the Chinese economy.

The positive momentum in Chinese stocks preceded the imminent release of key purchasing managers index data for April, expected to provide further insights into the country’s economic recovery trajectory.

Meanwhile, Hong Kong’s Hang Seng index led the gains in Asia, rising by 1.7%, propelled by advancements in technology and property stocks. Notably, the index approached bull market territory, trading approximately 20% above the five-year lows recorded in late January.

Elsewhere in Asia, other tech-heavy indexes also saw advances, with South Korea’s KOSPI gaining 0.8% on the back of strong performances in heavyweight chipmaking stocks. Taiwan’s Taiwan Weighted index surged by over 1% fueled by gains in chipmakers.

The tech sector’s optimism was primarily driven by the better-than-expected earnings from U.S. tech giants Microsoft and Alphabet, igniting a rally on Wall Street last Friday. Investors were buoyed by the prospect of sustained demand for artificial intelligence, fueling expectations for continued growth in tech stocks.

Additionally, broader gains lifted Australia’s ASX 200 by 0.8%, while futures for India’s Nifty 50 index indicated a marginally positive start. Notably, the Nifty is anticipated to witness volatility this week amidst preparations for the 2024 general elections.

Japanese markets remained closed for a holiday.

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