Asian stocks rise on US rate cut hopes

Asian stocks saw a slight increase on Monday as investor confidence grew regarding a potential US rate cut in September. Meanwhile, the euro faced challenges due to political uncertainty stemming from the recent French elections, which suggested a hung parliament, according to News.Az citing Reuters.

In a surprising turn of events, a leftist alliance in France emerged ahead of the far right, creating a significant upset that would likely prevent Marine Le Pen’s National Rally (RN) from governing. While the defeat of the far right provided some relief to investors, concerns lingered that the left’s agenda could reverse many of President Emmanuel Macron’s market-friendly reforms.

The euro experienced a slight dip, trading at $1.0828, down from Friday’s high of $1.0843 following a weak US jobs report that weighed on the dollar. Additionally, the euro fell by 0.25% against the Swiss franc to 0.9680 francs but remained steady against the yen at 174.00. The dollar was at 160.70 yen, just below its recent peak of 161.86.

European stock futures showed minor gains with EUROSTOXX 50 and FTSE futures both rising 0.1%. French 10-year bond futures saw a modest decline, dipping 23 ticks or 0.21%.

The prospect of a nearing US policy easing supported equities, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.1%, having reached a two-year high the previous week. Japan’s Nikkei increased by 0.2%, nearing record levels, while Chinese blue chips dropped by 0.4% as bond yields rose following new money market operations by the central bank.

In the US, S&P 500 and Nasdaq futures both fell by 0.1%. The earnings season is set to start later this week with Citigroup, JP Morgan, and Wells Fargo scheduled to report.

Friday’s jobs report was seen by investors as bolstering the case for a September rate cut from the Federal Reserve, with futures indicating a 77% likelihood of such a move. Markets have priced in 53 basis points of easing for this year, up from around 40 basis points a month ago.

Fidelity Asian Values Plc (LON:FAS) provides shareholders with a differentiated equity exposure to Asian Markets. Asia is the world’s fastest-growing economic region and the trust looks to capitalise on this by finding good businesses, run by good people and buying them at a good price.

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