Asian shares hit 15-m high on US rate cut bets

Asian stocks surged to a 15-month high on Tuesday, fuelled by renewed optimism about interest rate cuts in the United States, as reported by Reuters.

This positive sentiment comes after softer-than-expected US jobs data and comments from Federal Reserve Chair Jerome Powell hinting at a potential shift towards lower rates.

The broader MSCI index of Asia-Pacific shares outside Japan gained 0.3 per cent, with Japan’s Nikkei leading the rally with a 1.3 per cent increase.

However, Hong Kong’s Hang Seng bucked the trend, set to end its 10-day winning streak with a marginal 0.9 per cent loss.

The mood in the market was largely influenced by Powell’s remarks, who left the door open for a rate cut if inflation doesn’t show signs of improvement. Economists interpret this as a high bar for raising rates further.

The expectation of lower rates in the US weighed on the dollar. The Aussie dollar slipped 0.4 per cent after Australia’s central bank left rates unchanged but refrained from explicitly mentioning the risk of future hikes.

The dollar also gained against the yen, reaching 154.60 yen on Tuesday, raising concerns about potential intervention by Japanese authorities.

Meanwhile, bond yields remained steady. The US 10-year Treasury yield held at 4.49 per cent in Tokyo, with markets pricing in at least one rate cut by the Fed this year, likely in November.

Elsewhere, oil prices edged slightly higher, with Brent crude futures up 0.3 per cent to $83.58 per barrel, amid the ongoing uncertainty surrounding a potential ceasefire in the Middle East.

Wheat, corn, and soybean prices hovered near multi-month highs due to concerns about unfavorable weather conditions in key producing regions.

Iron ore futures continued their rally on expectations of further support for China’s property sector.