July 19, 2024

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Asian stocks rose, and the dollar fell after European Central Bank comments increased risk appetite

Asian stocks rose, and the dollar fell after European Central Bank comments increased risk appetite

Written by Stella Q

SYDNEY (Reuters) – Asian stocks rose on Tuesday, while the dollar remained lower for the third session in a row, as growing expectations of an imminent European interest rate cut contributed to increased risk appetite.

Gains were limited ahead of key inflation readings this week.

Europe is set for a slightly stronger open, with EUROSTOX 50 futures up 0.2%. This will depend on gains made overnight after several European Central Bank officials said the ECB has room to cut interest rates as inflation slows.

With the debate now turning to subsequent moves, markets have priced in two full rate cuts by October this year. This, in turn, sent Wall Street stock futures higher before US markets reopened after a public holiday.

S&P 500 futures rose 0.1%, and Nasdaq futures rose 0.2%.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2% after a 0.9% gain on Monday. Taiwanese stocks rose 0.5% to a record high, while Hong Kong’s Hang Seng Index pared some of its previous gains to 0.1%.

On the other hand, Japan’s Nikkei fell 0.2%, reversing some of the 0.7% advance the previous day.

“We’re heading into the northern hemisphere summer season,” said Tony Sycamore, an analyst at IG. “Traditionally that’s when markets tend to get into that drift mode.”

Sycamore believes the Hang Seng Index will rise further after the recent rise, as the data is likely to support further improvement in the Chinese economy. China will release its manufacturing and services activity surveys for May on Friday.

“I like the idea of ​​getting back into this trade on dips, and that’s something I think has seen more upside, whereas the Nikkei for me there are question marks hanging over this market right now.”

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He added that the Nikkei index had failed to return to near its record high in March and that there were signs that market participants were starting to withdraw money from the index to invest in Chinese markets.

This week’s big risk events won’t come until Friday when US figures on core personal consumption expenditures (PCE) – the Fed’s preferred measure of inflation – and euro zone inflation data set the tone.

In foreign exchange markets, the dollar was on the decline for the third straight session, falling 0.1% against major peers, as traders awaited the PCE release.

The average forecast for April is for a rise of 0.3% compared to the previous month, while the year-over-year forecast is for a rise of 2.8%, with risks to the downside.

The Japanese yen settled at 156.78 yen to the dollar, slightly stronger than the key level of 157. However, it continued to weaken against a slew of high-yielding currencies, with the New Zealand dollar hitting a 17-year high of 96.56 yen on Tuesday. [FRX/]

Thanks to strong buying demand, the New Zealand dollar reached its highest level in two and a half months at $0.6155.

The cash Treasury market returned from vacation with little action after taking a hit last week.

Two-year yields fell 1.6 basis points to 4.9375%, after rising 13 basis points the previous week, while 10-year yields fell 1 basis point to 4.4610%, after rising 5 basis points the previous week.

Oil prices continued the gains they achieved in the previous session. Brent crude futures rose 0.2 percent to $83.23 per barrel. US crude futures for July delivery reached $78.84 per barrel, up 1.4% from Friday’s close, after being traded during the US holiday.

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Gold prices rose for the third day in a row by 0.1% to $2,352.20 per ounce.

(Reporting by Stella Chiu; Editing by Jacqueline Wong and Edwina Gibbs)