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Global equity/currency market update: Asian Markets Mixed as Investors Eye European Rate Cuts and U.S. Inflation Data

28 May 2024 8:17 am
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Mumbai, 28 May (Commoditiescontrol): Asian shares showed a mixed performance on Tuesday after a rally in the previous session. The market's risk appetite was bolstered by rising expectations of an imminent European rate cut, ahead of key inflation data due later this week.

A series of statements from European Central Bank (ECB) officials overnight indicated that the ECB has room to cut interest rates as inflation slows. This has solidified market expectations for a rate cut on June 6, with debates now shifting towards future rate cuts. Markets have fully priced in two rate cuts by October this year.

These developments helped firm Wall Street stock futures as U.S. markets prepared to reopen after a public holiday. S&P 500 futures rose by 0.1%, while Nasdaq futures gained 0.2%, with traders awaiting guidance from several Federal Reserve speakers later in the day.

MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.4%, driven by a 0.7% gain in Hong Kong's Hang Seng index, following a 0.9% rise on Monday. Conversely, Japan's Nikkei slipped by 0.3%, partially reversing a 0.7% advance from the previous day. Chinese blue chips lost 0.1% after a 1% gain a day earlier, which was spurred by tech shares surging on Beijing's commitment to further invest in its semiconductor industry.

The major risk events this week are scheduled for Friday, when U.S. figures on core personal consumption expenditures (PCE) – the Federal Reserve's preferred inflation measure – and euro zone inflation data will influence market trading.

In the foreign exchange markets, the dollar weakened for the third consecutive session as traders positioned for the PCE release. Median forecasts predict a 0.3% rise in April, maintaining an annual pace of 2.8%, with risks skewed to the downside. The Japanese yen steadied at 156.80 per dollar, slightly stronger than the critical 157 level. It continued to weaken against higher-yielding currencies, with the New Zealand dollar hitting a fresh 17-year high of 96.56 yen and a 2-1/2-month high of $0.6155 due to strong carry demand.

In the bond market, cash Treasuries returned from a holiday with little movement. Two-year yields fell by 1 basis point to 4.9396%, following a 13 bps surge last week, while the 10-year yield remained at 4.4649% after a 5 bps increase last week.

Oil prices were mostly steady, with Brent futures rising 0.1% to $83.19 per barrel. Gold prices climbed for the third consecutive day, up 0.1% to $2,354.23 per ounce.

(By Commoditiescontrol Bureau: 09820130172)

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