Asian stocks steady as dollar weakens

Asian stocks were steady on Thursday as the dollar weakened due to lower US Treasury yields following mild consumer inflation data. This has increased expectations for the Federal Reserve to reduce interest rates next month.

Japan’s Nikkei index rose 0.5 per cent, while Australia’s stock benchmark added 0.1 per cent. Mainland China’s blue-chip index climbed 0.4 per cent, although Hong Kong’s Hang Seng index slipped 0.3 per cent.

The dollar weakened after overnight declines, with the euro trading flat at $1.1009. The 10-year Treasury yield ticked up slightly to 3.84 per cent in Asian trading hours.

Investors are increasingly betting on a rate cut by the Federal Reserve at its September meeting, following softer-than-expected US inflation data.

While the market is leaning towards a 25-basis point reduction, some anticipate a more aggressive 50 basis point cut.

However, uncertainty remains as investors await the release of US retail sales data later on Thursday. A weaker-than-expected reading could dampen market sentiment due to concerns about a potential US recession.

The Australian dollar edged higher after initially declining following employment data. The pound sterling remained subdued after recent soft UK inflation figures, which increased expectations of deeper and faster Bank of England rate cuts.

Oil prices rebounded slightly, with Brent crude futures up 0.2 per cent to $79.93 a barrel and US West Texas Intermediate crude gaining 0.3 per cent to $77.21. Gold edged up 0.1 per cent to $2,449.60 per ounce.

Attribution: Reuters

Subediting: M. S. Salama