Asian stocks took a positive lead from Wall Street

On Wednesday, most Asian equities saw a tiny increase, with Japan's Nikkei 225 closing in on all-time highs. In contrast, Chinese markets saw a decline due to a dismal report on activity in the service sector.

Wall Street, where the S&P 500 and the NASDAQ Composite concluded at all-time highs following Federal Reserve Chair Jerome Powell's announcement of some success in reducing inflation, provided a favourable lead-in for regional markets.

However, Powell also cautioned that the Fed needed more confidence to lower rates, which led to a modest decline in U.S. stock index futures.

Weak economic signals from China combined with expectations of fresh clues on U.S. interest rates this week, including nonfarm payroll data and Fed meeting minutes, restricted any significant increases in Asian markets.

The Nikkei 225 in Japan performed exceptionally well, surging and surpassing the 40,000 mark for the first time in three months. Additionally, the index was not far from March's record highs.

This week's sharp increase in the index was caused by the Bank of Japan's anticipated limited ability to tighten monetary policy this year, as indicated by the country's dismal economic statistics.

Japan's GDP statistics for the first quarter were updated, revealing a far worse drop than first anticipated. Despite the economic slowdown, traders continued to pour money into Japanese equities since corporate earnings had so far increased significantly.

Following a mediocre PMI reading on Wednesday, China's Shanghai Composite and Shanghai Shenzhen CSI 300 indices declined, trailing their international counterparts. The pair was also recovering from a precipitous decline from its May yearly highs.

With China's services sector cooling and fears over a wider recession in Asia's largest economy, the Caixin services PMI rose less than anticipated in June.

Since China reversed its anti-COVID policies in late 2022, the services industry has continued to grow and has supported corporate activity despite the industrial sector's decline. However, the industry may now be dealing with challenges from the consistently low local demand.

The BSE Sensex 30 and India's Nifty 50 index encountered resistance at all-time highs, indicating a slightly negative open, according to futures for the index.

The sentiment against Adani Enterprises and its affiliate companies also intensified following Hindenburg's increased position on a short-seller report from the previous year in which the company made severe accusations against the Indian giant. Hindenburg said that the securities regulator in India has sent them a show-cause notice.

Key Events Today:

• UK PMIs at 09:30 GMT
• US ADP Nonfarm Employment Change at 13:15 GMT
• US Initial Jobless Claims at 13:30 GMT
• US Services PMI at 14:45 GMT
• US ISM Non-Manufacturing PMI at 15:00 GMT

(Sources: investing.com, reuters.com)