On Tuesday, Asian markets experienced gains, driven by the rise in Japanese stocks, while the yen showed signs of stabilisation after a period of weakness against the US dollar. Japanese equities performed strongly, with a positive outlook for Hong Kong futures, although shares in Sydney remained largely unchanged. In contrast, US futures saw a slight dip ahead of Wall Street’s reopening after the Labor Day holiday.
The yen, after a significant decline last week, saw a modest recovery. However, analysts like Mark Matthews of Julius Baer predict that the Japanese currency will remain weak due to the persistent disparity in interest rates between the US and Japan. Matthews expects this trend to continue, with Japan’s rates remaining significantly lower than those in the US.
In China, concerns over economic slowdowns have intensified. Recent data revealed a contraction in Chinese factory activity for the fourth consecutive month in August, raising doubts about the country’s ability to meet its growth targets. This slowdown underscores the need for additional government stimulus as inventories of essential materials continue to grow, signalling ongoing economic challenges.
Globally, investors are approaching September with caution, given its historical performance as a challenging month for stocks. The upcoming US jobs report is anticipated to be a key factor in shaping market expectations, particularly regarding the Federal Reserve’s future rate decisions as the US election season gains momentum. There is speculation that the Fed might start easing rates soon, though the impact on the equity market remains uncertain, especially with the season’s typical market volatility in play.
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.
