(Bloomberg) — Asian shares Rose Monday as positive momentum from gains on Wall Street and signs of moderating US inflation extended this year’s rally in global stocks. The yuan gained after China’s central bank set a stronger-than-expected fix for the currency.

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Japan’s Topix index was on course for another gain that has the index repeatedly setting fresh highs back as far as mid 1990. Equities were also higher in South Korea, Australia and China, with notable strength in Hong Kong-listed technology shares.

Shares of Asian electric-vehicle makers and related suppliers climbed after Tesla Inc. delivering a record number of cars worldwide in the second quarter.

Meanwhile, the Bank of Japan’s manufacturing sentiment survey showed confidence among the nation’s big manufacturers rose, the first improvement in almost two years. Sentiment among non-manufacturers was also better.

US equity futures were flat in Asia’s early hours Monday. The Nasdaq 100 rose almost 2% last week and notched its best ever first-half of a year, with Apple Inc. hitting the $3 trillion milestone along the way. The S&P 500 reached the highest since April 2022 and posted its best first half since 2019.

Traders were encouraged as data showed inflation is moderating, even if that comes at the expense of growth. The personal consumption expenditures price index, one of the Federal Reserve’s preferred inflation gauges, rose 0.1% in May. From a year ago, the measure stepped down to 3.8%, the smallest annual advance in more than two years.

This kept action in the bond market subdued Friday after what was an eventful first half for the rates market. The Treasuries steadied Monday, while yields on policy sensitive three-year Australian government bond fell almost seven basis points.

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Major currencies were confined to narrow ranges versus the dollar after a gauge of greenback strength slipped 0.3% Friday, extending this year’s losses. The yuan gained after the People’s Bank of China once again set a stronger-than-expected fix for the currency.

China’s Caixin manufacturing PMI data showed the world’s second-largest economy is still struggling to rebound. Traders will also be weighing the implications of Chinese President Xi Jinping elevating a long-serving technocrat as the central bank’s top Communist Party official, which may indicate no drastic shifts in policy for now.

The yen was slightly weaker and is this year’s worst performing Group-of-10 currency. Investors will be watching for any central bank intervention should the yen weaken further.

At the moment, the BOJ seems willing to act when the officials think things are very lopsided, according to Sean Callow, senior currency strategist at Westpac Banking Corp. However, as long as the BOJ hasn’t adjusted its policy and the Federal Reserves maintains tight policy for longer, “they can’t realistically expect that there’s going to be a sharp appreciation in the yen,” he said on Bloomberg Television. “They can only really monitor where the speculators are.”

Oil was marginally lower as the second half kicked off, with traders focused on challenges to demand and a complex supply outlook.

Stocks Decoupling

From the US to markets around the world, the rally in equities has generated concern as well a celebration, given how much it appears to have decoupled from a worsening economic backdrop.

Nearly $5 trillion has been added to the value of companies in the Nasdaq 100 since the start of the year, with the tech-heavy gauge defying bubble warnings and jumping almost 40%. The advance in the most-influential group in the S&P 500 helped push the index up 16% in 2023. Gains have been even more pronounced when narrowed down to the megacap space — which has soared 74%.

While history shows that first-half rallies in the Nasdaq 100 of at least 10% are followed by returns averaging about 14% over the second half of the year, there’s worry over valuations. This has recently spurred a surge in bearish bets against the largest tech companies. Short interest as a percentage of shares available to trade is near 12-month highs for Microsoft Corp., Tesla Inc. and Amazon.com Inc., according to data compiled by S3 Partners.

Key events this week:

• Eurozone S&P Global Eurozone manufacturing PMI, Monday

• UK S&P Global/CIPS UK Manufacturing PMI, Monday

• US construction spending, ISM Manufacturing, light vehicle sales, Monday

• Australia interest rate decision, Tuesday

• US Independence Day national holiday. Financial markets closed, Tuesday

• China Caixin services and composite PMI, Wednesday

• Eurozone S&P Global Eurozone services PMI, PPI, Wednesday

• OPEC International Seminar, speakers including OPEC+ oil ministers, kicks off in Vienna, Wednesday

• FOMC issues minutes on June policy meeting, Wednesday

• New York Fed President John Williams in “fireside chat” at meeting of the Central Bank Research Association at the New York Fed, Wednesday

• US initial jobless claims, trade, ISM services, job openings, Thursday

• Dallas Fed President Lorie Logan speaks on a panel about the policy challenges for central banks at CEBRA meeting, Thursday

• US unemployment rate, nonfarm payrolls, Friday

• ECB’s Christine Lagarde addresses REAIX 2023 event in Aix-en-Provence, France, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 10:53 a.m. Tokyo time. The S&P 500 rose 1.2% Friday

• Nasdaq 100 futures were little changed. The Nasdaq 100 rose 1.6%

• Japan’s Topix rose 1.3%

• Hong Kong’s Hang Seng Index rose 1.2%

• China’s Shanghai Composite Index rose 0.6%

• Australia’s S&P/ASX 200 Index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0908

• The Japanese yen fell 0.1% to 144.50 per dollar

• The offshore yuan rose 0.2% to 7.2561 per dollar

• The Australian dollar fell 0.2% to $0.6653

Cryptocurrencies

• Bitcoin rose 0.3% to $30,672.83

• Ether rose 1.4% to $1,945.75

Bonds

Commodities

• West Texas Intermediate crude was little changed

• Spot gold fell 0.1% to $1,917.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rita Nazareth.

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