Asian equities increase as the Nikkei hits all-time highs

Tuesday saw gains in most Asian equities as investors increased their bets on lower U.S. interest rates. Japan's Nikkei 225 index reached a new high. Chinese markets, meanwhile, underperformed due to ongoing worries about a trade war.

Wall Street indexes provided some encouraging signals to regional markets, as the S&P 500 and the NASDAQ Composite managed to scrape by with record highs thanks to the strength of technology companies.

U.S. stock index futures increased during Asian trading, with attention mostly focused on Federal Reserve Chair Jerome Powell's two-day speech that starts later in the day. Following a slew of recent measures that indicated some cooling in U.S. inflation and the labour market, investors were waiting for dovish signals from Powell.

Asian markets saw a surge in recent sessions due to growing anticipation of interest rate reduction by the Federal Reserve. The likelihood of a reduction in September was thought to be priced in by the markets.

The Nikkei had its largest lift from technology equities, particularly chipmakers, which matched increases in their American rivals due to the excitement surrounding artificial intelligence. Additionally, yen weakness—which was close to a 38-year low—boosted export stockpiles.

Recent increases in Japanese equities were mostly driven by foreign purchasers as money was drawn in by a combination of the weakening yen and the Bank of Japan's dovish stance.

Local markets were more appealing because to expectations of significant corporate changes in Japanese corporations, which are expected to prioritise shareholder returns.

Other Asian markets saw a rise as well. KOSPI added 0.4% thanks to gains in technology, and Australia's ASX 200 jumped 0.7% after two days of losses. According to a confidential study, Australia's consumer mood declined in the first part of July due to ongoing worries about rising interest rates and inflation.

After the European Union put high taxes on the import of Chinese electric vehicles, sentiment towards China remained tense. The markets were keeping a close eye out for any reprisal from Beijing, particularly since authorities hinted at the potential for a trade conflict due to the tariffs.

Through June, Chinese equities mostly trailed their international counterparts as hopes for a domestic economic recovery waned in the face of mediocre economic data. This week, pay attention to China's trade and inflation data for further insights on the nation.

(Sources: investing.com, reuters.com)