Asia stocks soar amid growing US rate cut bets, China tech rally

Investing.com-- Most Asian stocks rose on Monday, tracking gains in Wall Street after dovish signals from the Federal Reserve ramped up bets that interest rate cuts were coming in the next month.

Chinese and Hong Kong stocks were the best performers in the region, as they benefited from a rally in local technology and artificial intelligence stocks.

S&P 500 Futures fell 0.1% in Asian trade, steadying after the S&P 500 surged 1.5% on Friday. Wall Street’s rally was sparked chiefly by Fed Chair Jerome Powell signaling more openness to cut interest rates, amid concerns over a cooling labor market. But Powell still signaled caution over cutting rates due to an uncertain outlook for inflation.

Markets were seen ratcheting up bets on a 25 basis point cut in September following Powell’s statement, CME Fedwatch showed.

China stocks soar; chipmakers rally on self reliance bets, Nvidia scrutiny

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 1.3% and 1%, respectively, while Hong Kong’s Hang Seng index rallied as much as 2%.

The CSI300 was close to surpassing its October 2024 highs, while the Shanghai Composite was near a 10-year high. Both indexes rallied sharply in August on increasing optimism towards the Chinese economy, as U.S. trade ties improved and as local growth stabilized.

The Hang Seng was near a four-year high, buoyed chiefly by gains in local tech and chipmaking stocks. Tech was boosted by expectations of lower U.S. interest rates, which increases the long-term appeal of the sector.

Chipmakers rallied amid increasing encouragement by Beijing that Chinese developers, especially in AI, use locally produced chips. This comes even as AI major NVIDIA Corporation (NASDAQ:NVDA) received approval to resume sales of its wildly popular H20 chip in China, which Beijing has warned local developers against using.

Chinese chip stocks have been on a tear since last week after major AI developer DeepSeek released an updated model which it billed as more adapted for domestically made chips.

Semiconductor Manufacturing International Corp (HK:0981), China’s biggest chipmaker, soared over 6% in HK trade, while Hua Hong Semiconductor Ltd (HK:1347) surged to an over four-year high before sharply curbing gains.

Cambricon Technologies Corp Ltd (SS:688256), a major Chinese developer of AI chips, soared 8.3% to a record high in Shanghai trade.

Asia stocks cheered by rate cut bets

Broader Asian markets also advanced amid growing conviction that the Fed will cut interest rates in September. Lower rates benefit risk-heavy Asian markets by inviting more foreign capital flows into assets with higher yields.

Japan’s Nikkei 225 and TOPIX indexes rose 0.7% and 0.3%, respectively.

South Korea’s KOSPI rose 1% on gains in tech and chips, while Singapore’s Straits Times index was mildly positive. Australia’s ASX 200 also lagged, rising only 0.2%, but remained close to recent record highs.

Futures for India’s Nifty 50 index fell 0.2%, pointing to some pressure on the Nifty before a deadline for 50% U.S. tariffs against India lands this week.