Asian stocks hit a one-month high on Tuesday, tracking a rally on Wall Street.
Asian stocks hit a one-month high on Tuesday, tracking a Wall Street rally fueled by expectations the Federal Reserve could offer more clues about imminent rate cuts later this week.
With the data calendar relatively light across major economies this week, all eyes are on Wednesday’s release of minutes from the Fed’s July meeting and Chairman Jerome Powell’s speech at Jackson Hole on Friday for clues on the outlook for U.S. rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan hit a one-month high before giving back some gains to trade 0.23 percent higher.
EUROSTOXX 50 futures gained 0.1 percent, although FTSE futures fell 0.32 percent.
Federal Reserve officials have in recent days signaled a possible rate easing in September, preparing markets for a similar tone from Powell and other speakers at the annual gathering of global central bankers and other policymakers in Jackson Hole, Wyoming.
“If they acknowledge the disinflationary trajectory of the US economy, they will confirm a rate cut in September,” said Thierry Wizman, global rates and currency strategist at Macquarie.
“Markets will likely become dependent on the extent to which Powell opens the door to the possibility of a 50 basis point (bp) cut at one of the next three FOMC meetings.” In Asia, Japan’s Nikkei hit its highest level in more than two weeks and was trading 1.9% higher in the last session, but Chinese stocks fell 0.7% on continued concerns about their gloomy economic outlook. Hong Kong’s Hang Seng index was down 0.36%.
China’s benchmark interest rates were kept unchanged as expected on Tuesday, prompting a muted market reaction.
Expectations of a dovish Fed outcome this week sent the dollar reeling at a more than seven-month low against the euro, which hit a high of $1.108775 on Tuesday. Sterling was hovering around a one-month high and was last trading at $1.2978.
The dollar index was last up slightly at 101.94, having fallen to its lowest level since early January of 101.76 earlier in the session.
Against the yen, the dollar rose 0.27 percent to 146.99, with traders also awaiting Bank of Japan (BOJ) Governor Kazuo Ueda’s appearance in parliament on Friday, where he is scheduled to discuss the central bank’s decision last month to raise interest rates.
The BOJ’s hawkish stance had injected huge volatility into markets as investors aggressively unwound yen-funded carry trades, rattling stocks globally.
Market turmoil has since eased after BOJ Deputy Governor Shinichi Uchida earlier this month played down the possibility of further rate hikes anytime soon.
“Now that markets are calming down, Ueda could change course and start talking about normalizing interest rates again,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
In Australia, the Reserve Bank of Australia judged a near-term rate cut was unlikely and policy may need to remain tight for an “extended period” to ensure inflation can be brought under control, minutes of the central bank’s August meeting released on Tuesday showed.
That gave the Australian dollar a slight boost, although it ultimately fell 0.2 percent after hitting a one-month high earlier in the session.
In commodities, oil prices fell slightly as concerns about a supply disruption in the Middle East eased; Brent crude fell 0.79 percent to $77.05 a barrel, while U.S. crude fell 0.83 percent to $73.75 a barrel.
Spot gold held near a record high and closed at $2,502.50 an ounce, supported by a broadly weaker dollar and expectations of imminent U.S. rate cuts.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: August 20, 2024 | 12:05 pm IS
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