Asian equities rise ahead of PCE data; weak PMIs for China encourage prospects for stimulus

With all eyes on the highly anticipated U.S. PCE inflation data on Friday, most Asian equities saw a small increase. Meanwhile, Chinese markets saw gains as encouraging statistics on business activity raised optimism for further stimulus.

With dismal GDP figures adding to worries about slowing economic growth and increasing interest rates, regional equities followed Wall Street's poor overnight finish with mediocre results. In Asian trading, U.S. stock index futures declined.

The Federal Reserve's chosen inflation indicator, the PCE price index data, was now the main focus for additional interest rate indications. Later on Friday is when the reading is due.

China's purchasing managers index data indicated a decline in economic activity, yet despite this, the Shanghai Composite and Shanghai Shenzhen CSI 300 indices increased by around 0.3% apiece on Friday.

While China's non-manufacturing PMI increased more slowly than anticipated in May, the country's manufacturing PMI continued to decline, suggesting that the stimulus from previous measures was running out.

However, the poor readings increased expectations that Beijing will provide further policy assistance for the economy, particularly after the government implemented a plethora of beneficial policies through May.

Due to the recent stalling of the recovery from multi-year lows, Chinese stocks were expected to have a flat end to May.

On the other hand, Hong Kong stocks performed better than other markets during the day, as the Hang Seng index increased 1.3% due to investors' purchases of highly discounted heavyweight technology firms.

By far the best performing index in Asia until the end of May was the Hang Seng, which gained almost 4% as investors looked for greater exposure to a possible economic revival in China.

The majority of Asian equities saw gains on Friday, but May was expected to be a mediocre month due to concerns about rising interest rates and inflation undermining investor confidence in the equity markets.

Tokyo consumer price index data indicated a little increase in inflation, and as a result, the Nikkei 225 index in Japan increased by 0.3%, while the larger TOPIX climbed by 0.7%.

However, both indices were expected to perform flat to poorly in May, plunging below their record highs from earlier in 2024.

Key Events Today:

• Eurozone CPI at 10:00 GMT
• US Core PCE at 13:30 GMT

(Sources: investing.com, reuters.com)