Asian Stocks Rise as Fed Rate Hike Bets Fizzle Out

Asian stocks rose on Monday as investors pared back bets for an imminent interest rate hike from the Federal Reserve. The U.S. dollar slipped towards two-month lows after a soft run of data, including a decline in retail sales and softer inflation readings.

The MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5%, while China's blue-chips rose 0.8% ahead of key economic data for July. The Hang Seng index jumped 1.6% as investors awaited the release of activity data, which is forecasted to show a slowdown in industrial output growth.

Oil prices were mixed after last week's gains, with Brent crude inching up 0.2% to $88.67 per barrel and U.S. crude slipping 0.2% to $82.19 per barrel. The risk of higher oil prices remains due to the ongoing stalemate in the Gulf conflict.

Shane Oliver, chief economist at AMP, said that while there is still no resolution to the Iran/Hormuz impasse, their base case remains that oil prices will stay within a $70-$100 range. The risk of higher oil prices is also driven by potential reserve depletion and reduced oil flow from the Middle East.