Investors in Japan took an optimistic view ahead of key economic releases this week and participated in an Asia-wide rally amid speculation that the U.S. Federal Reserve is more likely to lower rates next month.
Japan's core rate of inflation stayed well above the Bank of Japan's target rate, supporting the central bank's rate hike campaign. Food price inflation accelerated, but the surge in rice prices eased a little.
Mainland China-based indexes extended their weekly gains as large and small investors increased their stock exposure amid low valuation and improving sentiment for earnings outlook.
Japan's manufacturing sector activities growth contracted in 13 of the past 14 months, as U.S. tariffs weighed on overall exports. The overall private sector activities growth eased, and the growth in the services sector softened in August.
China and Hong Kong indexes wavered as investors reviewed the latest batch of earnings. The uncertain U.S. trade policy and persistent weakness in the residential property markets are weighing on investor sentiment.
Japan's indexes extended a two-day slump following the weakness in tech stocks in overnight trading on Wall Street. Japan's trade deficit shrank after imports fell faster than exports in July.
China and Hong Kong indexes extended losses to the fifth consecutive session, and the People's Bank of China held steady loan prime rates at record low levels for the third consecutive month.
Japan's economy expanded at a faster-than-expected pace in the second quarter, driven by sustained consumer spending and a boost from pre-tariff increases in shipments to the U.S.
Earnings optimism supported benchmark indexes in China and Hong Kong near multi-year highs. Tencent Holdings, Power Assets Holdings, and CK Infrastructure Holdings advanced after the release of financial results.
