MSCI Index Rises and Hong Kong’s Hang Seng Extends Winning Streak
The MSCI’s broadest index of Asia-Pacific shares outside Japan saw a slight increase in early trade, while Hong Kong’s Hang Seng index, despite a slight dip, has witnessed an impressive 14% rise over a 10-day winning streak, the longest since 2018. Japan’s Nikkei index also climbed, and S&P 500 futures remained stable.
U.S. Jobs Data and Fed Chair’s Statements Drive Optimism
The market’s optimism is largely driven by weaker-than-expected U.S. jobs data and statements made by Federal Reserve Chair Jerome Powell, suggesting that rates are more likely to decrease. This is once again fueling bullish momentum as we see capital flow back into equities.
U.S. Treasuries Remain Steady as Rate Cut Expectations Grow
U.S. Treasuries remained steady, with 10-year yields at 4.49% in Tokyo. The interest rates market is pricing in at least one rate cut in the U.S. by November. A series of U.S. Treasury note auctions are set to take place, starting with a $58 billion three-year note auction on Tuesday, followed by $42 billion in 10-year sales on Wednesday, and $25 billion of 30-year bonds on Thursday.
Japanese Yen Under Pressure and RBA Policy Meeting in Focus
The U.S. dollar experienced fluctuations, particularly against the Japanese yen, which has been under pressure. The dollar rose to 154.17 yen on Tuesday, following a 0.6% increase on Monday, keeping markets alert to the possibility of intervention by Japanese authorities to defend the currency. The RBA is expected to maintain current interest rates, but the focus is on whether it will adopt a more hawkish stance or signal potential rate hikes after recent inflation data.
Commodities
Brent crude futures rose slightly to $83.58 a barrel amid ongoing conflicts in the Middle East, while gold prices remained stable at $2,325 an ounce. Agricultural commodities like wheat, corn, and soybeans have hit multi-month highs due to adverse weather conditions in Russia and Brazil. Iron ore futures have also surged, following signals of further support measures for China’s property sector from the country’s Politburo.
Conclusion
As the Asian markets continue to rally on the prospect of U.S. interest rate cuts, investors remain vigilant, closely watching the RBA’s policy meeting and the Japanese yen’s movements. The overall market sentiment remains positive, supported by the Fed’s stance and the potential for further economic growth in the region.
