©Reuters.
Investing.com — Most Asian stocks rose on Monday as caution grew this week, especially ahead of a flurry of major central bank meetings between the Federal Reserve and the Bank of Japan.
Moderate economic data from China also weighed on sentiment, as the region's largest economy continues to suffer from slowing growth.
Inflation expectations for the second half of the week remain a key focus as markets worry about hawkish signals from central banks following stronger-than-expected inflation trends in the United States. In Asian markets, US stock index futures prices were sluggish.
However, despite widespread speculation that the Bank of Japan's negative interest rates and yield curve control policies were nearing an end, Japanese stocks significantly outperformed their peers and soared.
Japanese stocks rebound with Bank of Japan pivot in sight
Japan's index rose more than 2% on Monday, while other indexes rose 1.6%. Both indexes have rallied toward all-time highs after falling from their highs over the past week.
A broad range of sectors rose, although consumer stocks rose on expectations for domestic wage increases.car manufacturer Honda Motor Co Ltd (TYO:) (NYSE:) and Nissan Motor Co., Ltd (TYO:) also soared on reports that it had signed a partnership to develop electric vehicles.
Japanese stocks rose even as hopes grew that the Bank of Japan was nearing the end of its ultra-dovish monetary policy, with the possibility of interest rate hikes on the horizon. Banks will decide on Tuesday.
Analysts are divided on whether the Bank of Japan will raise interest rates on Tuesday or in April. In the event of a rate hike, the central bank is expected to raise interest rates by 20 basis points, from -0.1% to 0.1%.
The end of the Bank of Japan's ultra-dovish policy marks the end of nearly a decade of flash liquidity that Japanese markets have enjoyed, but it also reflects growing confidence in the Japanese economy. Japan's labor unions won big pay increases from employers this year, a good sign for the consumption-based economy.
Chinese stocks gradually rise as production and retail sales are mixed
China's index and index rose 0.5% and 0.4%, respectively, as data showed stronger-than-expected growth in the January-February period.
While this measure shows strength in China's manufacturing production, other measures show that consumption is slowing while unemployment is unexpectedly rising.
China unexpectedly rose to 5.3% in the first two months of 2024, but growth was weaker than expected despite a boost from the Lunar New Year holiday.
The Hong Kong index fell 0.3% as mainland stocks fell.
Among other Asian stocks, the Australian index was little moved in anticipation of Tuesday's meeting. The RBA is widely expected to keep interest rates on hold, but is also expected to remain hawkish as inflation continues.
South Korea's index rose 0.4%, while India's index had a weak start as market caution kept investors taking profits from record highs hit in early March.
