Asian markets rise amid strong US earnings

Asian stock markets mostly traded higher on Tuesday, buoyed by a strong close on Wall Street and optimism about corporate earnings. The dollar remained near a two-month peak, supported by expectations of a smaller Fed rate cut next month.

Oil prices fell by approximately three per cent following reports that Israeli Prime Minister Benjamin Netanyahu indicated Israel’s willingness to target Iranian military facilities, rather than nuclear or oil infrastructure.

Japan’s Nikkei 225 index rallied one per cent to a three-week high after being closed on Monday for a holiday.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent, with gains in Taiwan and Australia offsetting declines in Chinese markets.

China’s blue-chip CSI300 index fell 0.4 per cent, while Hong Kong’s Hang Seng index slipped 0.3 per cent. Investors were disappointed by the lack of specific details regarding new stimulus measures from Beijing to boost the struggling economy.

Local media reported that Beijing may raise an additional six trillion yuan ($850 billion) from Treasury bonds over the next three years to support economic growth.

In the foreign exchange market, the dollar weakened slightly against the Japanese yen, retreating from a 2-1/2-month high. The euro held steady, rising from its 10-week low ahead of the European Central Bank’s interest rate decision on Thursday.

The dollar has been supported by expectations that the Federal Reserve will opt for a smaller 25 basis point rate cut next month, rather than a 50-basis point reduction, given the continued growth of the US economy without excessive overheating.

Fed Governor Christopher Waller recently called for “more caution” regarding future interest rate cuts, while Fed Minneapolis President Neel Kashkari indicated support for more modest rate reductions.

Oil prices fell for the third day in a row due to worries about demand and reduced tensions over a potential attack on Iran. Brent crude dropped 2.9 per cent to $75.22 a barrel. Gold prices also dipped slightly to $2,648.57 an ounce.

Attribution: Reuters

Subediting: M. S. Salama