By Rae Wee
SINGAPORE (Reuters) – Asian shares rose on Friday and are poised for a steady end to August as the dollar looks set for its worst monthly performance in nine months, as the Federal Reserve is set to cut interest rates next month. .
The release of the core US personal consumption expenditure (PCE) price index, the Fed’s preferred measure of inflation, also took center stage on Friday’s euro zone inflation reading, and will provide further clues about the outlook for rates around the world. economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan ended up 0.44%, and is set to gain nearly 2% for the month.
US stock futures added to Wall Street’s positives, with Nasdaq futures rising 0.25% and advancing 0.12%.
Solid growth and resilience in the world’s largest economy trumped investor disappointment in Nvidia (NASDAQ: ) underwhelming results, which has sent global technology stocks falling.
Taiwan’s and South Korea’s benchmark indices, both tech-heavy indices, recovered from Thursday’s losses to end trade 0.35% and 0.62% higher, respectively.
“U.S. data overnight dampened recession fears,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
Financial markets were in turmoil in August, after weaker-than-expected US economic data earlier in the month fueled fears of an impending recession, forcing investors to shed riskier assets in search of safety.
Volatility worsened due to the withdrawal of yen-funded carry trades after the unexpected increase in interest rates by the Bank of Japan (BOJ), which led to a sell-off in global stocks on August 5 that resembled “Black” October 1987. Monday”.
has begun to recover from the collapse of the beginning of the month, although it is still set to lose 1.4% for the month. It ended up 0.6% on Friday.
The broader index also gained 0.6%, despite a monthly decline of more than 3%, the worst since December 2022.
Data on Friday showed core consumer prices in the Japanese capital accelerated for the fourth straight month, keeping alive market expectations of a further BOJ rate hike in the coming months.
“Amidst stable market conditions, the market will definitely signal a rate hike by the BOJ in Q4,” Tan told RBC.
EASING CYCLE
The main focus for investors remains on the pace and size of Fed interest rate cuts this year, with those bets further cemented after a chorus of Fed speakers signaled their intention to do so next month.
The market is pricing in about 100 basis points for the end of the year, with about a 32.5% chance of a 50bp cut in September.
That left the dollar struggling as it saw its sharpest monthly decline since November on Friday.
Against the yen, the greenback last stood at 144.78 and is set to lose more than 3% for the month, as it eases pressure on the Japanese currency in the prospect of narrowing interest rate differentials.
The euro ticked marginally higher to $1.1079, paring some losses of 0.38% from the previous session after German inflation data was lower than expected added to the bets of the European Central Bank (ECB) further rate cuts.
“Germany is obviously a big weight in the eurozone, so if we get a surprise in Germany, it could be a bigger number,” said Rob Carnell, ING’s regional head of research for Asia-Pacific.
“The ECB has been humming and harring a bit about the September cut, and there will probably be more after that. It makes it look more likely.”
In commodities, oil prices were slightly higher as investors weighed supply concerns in the Middle East against signs of weakening demand. (O/R)
futures rose 0.06% to $79.99 a barrel, while the US West Texas Intermediate crude contract rose 0.14% to $76.02.
fell 0.23% to $2,515.25 per ounce, although it was set for a 2.7% gain for the month, helped by the prospect of an imminent Fed easing cycle and a weaker dollar. (GOAL/)
