Asian stocks rise on Fed Chair comments
Asian stocks rose on Wednesday after Federal Reserve Chair Jerome Powell’s comments supported expectations of US rate cuts. The yen stayed close to 1986 levels, leading traders to be cautious about possible Japanese intervention.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.26 per cent, while Japan’s Nikkei rose 0.49 per cent, approaching the record high reached in March.
Powell mentioned that the US economy is moving towards lower inflation, but he wants more data before thinking about cutting interest rates.
His remarks caused a 4.3 basis point decrease in US Treasury yields, with the 10-year note yield staying at 4.433 per cent in Asian trading on Wednesday. The strong US job market also impacted investor confidence.
Michael Brown, a senior research strategist at Pepperstone, observed that Powell’s recent comments seemed more dovish. The market is now pricing in a 69 per cent probability of a Fed rate cut in September, with the potential for two cuts this year.
In early trading, Chinese stocks fell, with the blue-chip CSI 300 index down 0.27 per cent. Hong Kong’s Hang Seng, on the other hand, edged 0.3 per cent higher.
Data revealed that China’s services activity expanded at its slowest pace in eight months, and confidence hit a four-year low in June due to slower growth in new orders. This suggests a need for additional economic stimulus.
The prospect of an impending US rate cut has tempered the dollar’s rise. The dollar index, which measures the US unit against six major currencies, remained steady at 105.71.
The yen weakened slightly to 161.63 per dollar, approaching the 38-year low of 161.745 reached on Tuesday. The yen has depreciated over 12 per cent against the greenback this year, driven by the interest rate differential between the US and Japan.
Commodity markets saw higher oil prices as US industry data boosted hopes of solid fuel demand during the summer driving season.
Brent crude oil futures rose 0.44 per cent to $86.62 per barrel, while US West Texas Intermediate crude futures were 0.41 per cent higher at $83.15 per barrel.
Attribution: Reuters
