Asian stocks ascended to a one-month peak on Tuesday, mirroring Wall Street’s rally fueled by speculations that the Federal Reserve may hint at upcoming rate cuts later this week. The relatively light global economic calendar has shifted all focus to the Fed’s July meeting minutes and Chair Jerome Powell’s speech at Jackson Hole this Friday for insights on U.S. rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed to a one-month high before settling 0.23% higher. Correspondingly, U.S. stock futures also showed gains with S&P 500 futures up 0.02% and Nasdaq futures up 0.12%.
The diverse reactions across global markets included EUROSTOXX 50 futures rising 0.1% while FTSE futures fell 0.32%. Recent signals by Fed policymakers suggest potential rate easing in September, setting precedents for similar outlooks from Powell and other attendees at the central bank symposium in Jackson Hole, Wyoming.
Thierry Wizman, Macquarie’s global FX and rates strategist, stated, ‘Should they acknowledge the U.S. economy’s disinflation path, it will confirm a September rate cut.’ Markets are keenly observing Powell’s stance on the possibility of a 50 basis point cut in one of the next three FOMC meetings.
In Asia, Japan’s Nikkei gained 1.9%, its highest level in over two weeks. However, Chinese blue-chips dropped 0.7% amid ongoing economic concerns, while Hong Kong’s Hang Seng Index dipped by 0.36%. China’s benchmark lending rates remained unchanged, leading to minimal market reactions.
The anticipation of a dovish stance from the Fed has weakened the dollar to a seven-month low against the euro, which reached $1.108775. Sterling maintained near its one-month high at $1.2978, while the dollar index inched up to 101.94.
The dollar advanced 0.27% to 146.99 against the yen with market attention on Bank of Japan Governor Kazuo Ueda’s parliamentary discussion on interest rates this Friday. Volatility had surged following BOJ’s rate hikes, but comments from Deputy Governor Shinichi Uchida tempered expectations of imminent further increases.
Australia’s Reserve Bank indicated that a near-term rate cut is unlikely, and restrictive policy might persist to control inflation, boosting the Australian dollar slightly before it dipped 0.2%.
Oil prices fell with easing Middle East supply disruptions, Brent crude down 0.79% at $77.05 a barrel and U.S. crude down 0.83% at $73.75. Spot gold hovered near a record high at $2,502.50 per ounce, supported by a weaker dollar and anticipated U.S. rate cuts.
(With inputs from agencies.)
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Publish date : 2024-08-19 18:52:00
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