Asian stocks climb on rate cut hopes
Asian stocks surged to a one-month high on Tuesday, mirroring a rally on Wall Street fuelled by expectations that the Federal Reserve will signal imminent interest rate cuts later this week.
With a light data calendar across major economies, investors are glued to the release of the Fed’s July meeting minutes on Wednesday and Chair Jerome Powell’s speech at Jackson Hole on Friday, both offering clues on the future of US monetary policy.
The MSCI broadest index of Asia-Pacific shares outside Japan briefly touched a one-month peak before paring some gains to trade 0.4 per cent higher. Japan’s Nikkei rose 1.7 per cent, lifted by a jump in technology stocks and shrugging off the recent strengthening of the yen.
Recent comments from Fed officials have hinted at a potential easing in September. This sentiment helped gold prices hover near a record high, above $2,500 per ounce.
Meanwhile, the dollar weakened further, trading at its lowest level in over seven months against a basket of currencies, at 101.76.
Anticipation of a dovish Fed outcome sent the dollar tumbling to a seven-month low against the euro, which peaked at $1.108775 on Tuesday.
Sterling also hovered near a one-month high, trading at $1.2985. Against the yen, the greenback fell 0.23 per cent to 146.26.
Risk appetite received an additional boost from news that Israeli Prime Minister Benjamin Netanyahu had accepted a “bridging proposal” from Washington to address disagreements hindering a ceasefire deal in Gaza.
US stock futures remained relatively flat in early Asian trade, with S&P 500 futures down 0.02 per cent and Nasdaq futures up 0.04 per cent. European futures were mixed, with EUROSTOXX 50 futures flat and FTSE futures down 0.36 per cent.
In Asia, China’s benchmark lending rates were left unchanged as anticipated, with no significant market reaction.
However, shares of Japan’s Seven & plunged over seven per cent, reversing a 23 per cent surge on Monday following news of a potential takeover offer from Canada’s Alimentation Couche-Tard.
Later this week, investors will be closely watching Bank of Japan (BOJ) Governor Kazuo Ueda’s appearance in parliament on Friday. His comments are expected to address the central bank’s decision to raise interest rates last month.
Oil prices edged lower as concerns about a Middle East supply disruption eased. Brent crude fell 0.15 per cent to $77.54 per barrel, while US crude dipped 0.5 per cent to $74 per barrel.
Attribution: Reuters
Subediting: M. S. Salama
