Asian stocks achieved a one-month high on Tuesday, buoyed by a rally on Wall Street driven by speculation that the Federal Reserve might indicate upcoming rate cuts later this week.
With minimal economic data being released, the focus has shifted to the Federal Reserve’s July meeting minutes, set to be released on Wednesday, and Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday, which are expected to offer insights into the future of U.S. interest rates.
The MSCI’s broad index of Asia-Pacific shares outside Japan reached its highest point in a month before slightly retreating to a 0.4% gain. Japan’s Nikkei index climbed 1.7%, bolstered by a surge in technology stocks, despite the yen’s recent strengthening.
Recent comments from Federal Reserve officials have hinted at a potential easing of monetary policy in September, which has supported gold prices, keeping them above $2,500, close to a record high. The U.S. dollar also slipped to its lowest level in over seven months against a basket of currencies, sitting at 101.76 in early Tuesday trading. The prospect of a dovish Fed has left the dollar struggling against the euro, which reached $1.108775 on Tuesday. The British pound hovered near a one-month high, trading at $1.2985, while the dollar weakened by 0.23% against the yen, reaching 146.26.
Investor sentiment was also lifted by news that Israeli Prime Minister Benjamin Netanyahu accepted a proposal from Washington aimed at resolving disputes hindering a ceasefire deal in Gaza.
In early Asian trading, U.S. stock futures showed little change, with S&P 500 futures down just 0.02% and Nasdaq futures up 0.04%. EUROSTOXX 50 futures remained steady, while FTSE futures dipped by 0.36%.
In China, the country’s benchmark lending rates remained unchanged, as expected, with little market reaction. Meanwhile, Japan’s Seven & I shares dropped more than 7%, following a 23% surge in the previous session after Canada’s Alimentation Couche-Tard made an offer to acquire the 7-Eleven owner.
Later this week, attention will turn to Bank of Japan (BOJ) Governor Kazuo Ueda’s appearance in parliament on Friday, where he is expected to discuss last month’s decision by the central bank to raise interest rates. The BOJ’s hawkish stance had previously caused significant market volatility as investors reversed yen-funded carry trades, affecting global stocks. However, market instability has eased after BOJ Deputy Governor Shinichi Uchida downplayed the likelihood of further rate hikes in the near future.
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