Asian equities rose, joining a global rally as bets the Federal Reserve will soon start cutting interest rates fueled a rush into riskier corners of the market. MSCI’s Asia Pacific Index - a gauge for benchmarks in the region - snapped a three-day decline, after US hares advanced to fresh highs, pushing global stocks to a new peak. The index trimmed some of it earlier gains, dragged down by Japanese stocks after US warned allies of stricter trade rules in China crackdown. Stocks in Hong Kong and mainland China fluctuated as traders awaited more details from the Third Plenum. Risk-on appetite appears to be back in Asia after increasing chances of a Donald Trump presidency raised concerns over geopolitical and trade risks over the past few sessions. Optimism that the Fed will cut rates soon, alongside signs of US retail resilience, supported sentiment. The risk-on sentiment drove a rotation into smaller US stocks — the Russell 2000 Index is up 12% in the last five sessions, its best showing since April 2020. Treasury yields were little changed Wednesday, after declines on Tuesday. The dollar was little changed. The yen fell early Wednesday, dropping a third day against the greenback. New Zealand yields edged higher with the kiwi after mixed inflation data muddied the outlook for an interest rate cut. Singapore’s exports declined more than expected in June as electronics shipments remained weak, suggesting challenges ahead for the trade-reliant economy.
In Asia, economic data due include a monetary-policy decision in Indonesia. Markets are closed in India and Pakistan. To Solita Marcelli at UBS Global Wealth Management, if the Fed can cut rates significantly in the context of a soft landing, there will be better prospects for a re-acceleration in earnings growth for lower quality and cyclical segments of the market. Some Wall Street economists are cautioning the Fed is waiting too long to reverse course after raising interest rates to a two-decade high. The International Monetary Fund, meanwhile, warned inflation in many major economies has been cooling slower than expected, flagging a potential risk to global growth from interest rates staying higher “for even longer.” The strength of the equity market has been underpinned by optimism the economy has withstood the worst of Fed tightening. In this regard, Tuesday’s better-than-estimated retail sales report was a “healthy” development, according to Bret Kenwell at eToro. It’s better to see the Fed cutting rates on falling inflation than to see the central bank rushing to bolster a weakened economy, he noted. In commodities, gold hit another record after rallying almost 2% Tuesday to touch an all-time high of $2,469.66 per ounce, while West Texas Intermediate declined for a fourth day. US After Hours FIVE -8.8% falls on lowered Q2 guidance, CEO steps down; AEHR +12.6%, FULT +2.1% higher on earnings; GTES +6.3% to join S&P SmallCap 600.
Nikkei -0.20% Hang Seng +0.29% CSI +0.24% Shanghai -0.24% Shenzen -0.25%
Eur$ 1.0904 CNH 7.2865 CNY 7.2684 JPY 158.20 GBP 1.2970 CHF 0.8938 RUB 88.4001 TRY 33.0822 WTI$ 80.64 Gold 2,470 BTC 65,959 +2% ETH 3,513 +2%
S&P -0.21% Nasdaq -0.39% EuroStoxx -0.24% FTSE +0.32% Dax +0.06% SMI +0.35%
Macro :
- Greece to Impose One-Off Tax on Power Producers to Lower Bills
- Hedge Fund e360 Drops 25% as Commodities Traders’ Fortunes Swing
- KUGLER: FED DOESN'T WANT TO SEE LABOR MARKET COOL TOO MUCH
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- DG FP : Vinci June Passenger Traffic +7.9%
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