GLOBAL MARKETS-Asian shares hit two-week high on prospects for Fed pause
Asian equities rise to two-week high and dollar wobbles as weak US jobs data suggests the Federal Reserve may halt interest rate hikes.
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Posted 8/30/2023, 6:19:00 AM
yahoo.com
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Treasury yields reach new decade highs in Asia as traders become concerned about the duration of elevated interest rates, causing a dampening effect on stocks, particularly in China, even as some markets attempt to rebound.
Asian stocks rise as traders await signals on interest rate plans from the Federal Reserve conference, with hopes that further rate hikes will be ruled out but concerns about inflation persisting.
Asian currencies slightly rose as U.S. yields increased, prompting Thailand's and China's central banks to stabilize their currencies, while the Philippines' central bank stated it may intervene to support its currency; additionally, traders are anticipating the U.S. Federal Reserve's symposium in Jackson Hole, Wyoming.
Asian stocks sold off and the dollar reached an 11-week high against major peers as investors prepared for a potentially hawkish stance from Federal Reserve Chair Jerome Powell at the Jackson Hole meeting, with concerns about global growth and a firmer dollar weighing on crude oil.
Traders are expecting a volatile start to the week as policymakers from the US and Europe indicate that interest rates will likely remain higher for a longer period of time, leading to increased yields on bonds and a weakening of the yen.
Federal Reserve Chair Jerome Powell warned that inflation and economic growth remain too high, indicating that interest rates may continue to rise and remain restrictive for longer. However, markets rebounded, with US stocks rallying and Asian markets starting the week on a high note. The Hong Kong stock market saw contrasting performances, with China Evergrande Group plunging while Xpeng soared. US Trade Representative Katherine Tai highlighted China's dominance in rare earth metals, making US supply chains vulnerable. Investors will be watching for the Personal Consumption Expenditure report and the August jobs report to gauge the Fed's future rate decisions. Powell's ambiguous remarks left room for interpretation, with markets focusing on the positive outlook for economic growth rather than the cautionary tone on interest rates.
Asian markets are expected to start strong following a rally in stocks and risk assets, driven by a softening of the U.S. interest rate outlook and positive economic indicators, although concerns about the Chinese market and inflation remain.
The US dollar experienced a major technical reversal due to a weaker JOLTs report, leading to a drop in US interest rates, while market positioning played a role in the price action; the focus now shifts to personal consumption figures and US jobs data, with the euro and sterling firm but most other G10 currencies softer, and emerging market currencies mixed. In Asia, most large bourses advanced, but Europe's Stoxx 600 fell after rallying in previous sessions, while US index futures traded softer; European bonds are selling up, gold is consolidating, and oil prices are firm. Australia's CPI slowed more than expected, China is expected to release the August PMI, and Japan reports July retail sales. The US dollar has seen no follow-through selling against the yen, yuan, or Australian dollar, while the euro and sterling staged impressive price action. The JOLTS report saw the dollar and US rates reverse lower, and today the US reports advanced merchandise trade figures for July, with the Canadian dollar as the worst performing G10 currency yesterday.
Global interest rate hikes, challenges in China, a stronger dollar, and political instability in Africa have impacted emerging market assets, causing stock and currency declines and property market concerns in China, while Turkey's markets have seen a boost in response to interest rate hikes, and African debt markets have experienced a significant pullback.
Traders believe that the US Federal Reserve will not raise interest rates further this year, as the latest jobs report showed an increase in unemployment and a cooling wage growth, prompting the Fed to potentially halt rate hikes and keep policy on hold.
Emerging-market central banks are resisting expectations of interest rate cuts, which is lowering the outlook for developing-nation bonds, as central banks in Asia and Latin America turn hawkish in response to the "higher-for-longer" stance taken by the Federal Reserve, currency pressures, and the threat of inflation.
Asian stocks are poised for modest gains as traders consider US jobs data suggesting the Federal Reserve may be close to the end of its tightening cycle.
The U.S. is currently experiencing a prolonged high inflation cycle that is causing significant damage to the purchasing power of the currency, and the recent lower inflation rate is misleading as it ignores the accumulated harm; in order to combat this cycle, the Federal Reserve needs to raise interest rates higher than the inflation rate and reverse its bond purchases.
Asia-Pacific markets are expected to have a mixed start to the week as investors await key data from Australia and China, while in the US, the unemployment rate rose to 3.8% in August and traders are betting that the Federal Reserve may not raise rates further this year. Additionally, the highly anticipated IPO of Softbank-backed Arm is expected to arrive later in the month.
Equities rose on Monday as market participants speculated that the Federal Reserve may be nearing the end of its interest rate hike cycle, following a positive US jobs report and signs of a softening labor market. Additionally, investors were hopeful that China would implement measures to stimulate its economy and property sector.
Asian stocks, particularly China shares, have continued to rally amid speculation that Beijing's small policy measures could result in significant stimulus, with expectations of a relaxation of property buyer restrictions; Japanese shares have also seen positive performance after data revealed record recurring profits in Q2, resulting in the Topix reaching a 33-year high; U.S. futures imply a high probability of no interest rate hike this month and suggest the tightening cycle may be over, while Treasuries sold off on Friday, leading to concerns over the budget deficit and potential difficulties in absorbing new debt.
Asian equities fell as China's efforts to stabilize its economy and the Reserve Bank of Australia's policy meeting were awaited.
The dollar has reached a five-month high as investors anticipate the need for elevated interest rates due to the strong US economy, with factors such as weak growth in China and Europe, rising US yields, and falling equity prices further supporting the case for dollar strength.
Asia stocks fall as weak economic data in China and Europe raise concerns over global growth, while the dollar strengthens as investors assess the outlook for U.S. interest rates.
The rising U.S. dollar is causing concern among foreign officials and investors, but it remains uncertain if anything can be done to stop its rise or if it will negatively impact U.S. equities.
Asian markets are weighed down by concerns over high U.S. bond yields, a strong dollar, China's economic struggles, and rising oil prices.
Asian equities face a cautious start to trading while the yen strengthens following potentially hawkish remarks from the Bank of Japan governor, with futures for Australia slightly higher, US-listed Chinese stocks falling, and contracts for Japan showing a small gain.
Asia stock markets are softer ahead of U.S inflation data, with investors looking for signals about the Federal Reserve's next moves on interest rates.
The Bank of Japan has signaled a possible early end to its easy money stance, with the central bank considering interest rate hikes and an early end to its bond-buying policy, which caught markets off guard and caused the yen to surge and Japanese government bond yields to reach a 9-year high.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
Asian currencies are experiencing slight fluctuations against the US dollar, with the Japanese yen, Singapore dollar, and Taiwan dollar showing small movements.
The US dollar remains stable in Asian trades as the yen and sterling experience slight fluctuations due to upcoming central bank meetings, including the Bank of Japan's policy meeting, the US Federal Reserve's hawkish pause, and the Bank of England's possible interest rate increase.
Asian stocks sink as investors await the Federal Reserve's policy decision and concerns over inflation rise due to a surge in oil prices.
The Federal Reserve is expected to announce a pause on interest rate hikes due to positive economic indicators and the likelihood of a "soft landing" for the economy, but future decisions will be influenced by factors such as the resumption of student loan payments and a potential government shutdown.
Asian markets will be influenced by three monetary policy decisions in Asia and the Bank of England's decision on interest rates, as investors react to the Federal Reserve's policy decision and revised forecasts.
Asian stocks dipped across the board as investors interpreted the US Federal Reserve's latest policy statements as signaling higher-for-longer interest rates.
U.S. stocks are expected to open lower and the dollar is soaring after the Federal Reserve indicated that interest rates will remain higher for a longer period, while the Bank of England faces a tough rate decision and the Swiss National Bank has paused its rate-hiking cycle.