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Global equity/currency market update: Asian Stocks Dip as Investors Weigh U.S. Fed Outlook and Await BOJ Meeting

14 Jun 2024 8:38 am
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Mumbai, 14 Jun (Commoditiescontrol): Asian stocks declined on Friday as investors mulled over the U.S. Federal Reserve's tempered rate-cut projections despite softer-than-expected inflation data. The market also awaited the Bank of Japan's policy meeting, with the yen trading shakily.

The MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.48%. Chinese blue-chip stocks slid by 0.3%, and Hong Kong's Hang Seng fell by 0.79%. Japan's Nikkei also declined by 0.25%, while the yen slightly weakened to 157.185 per dollar in early trading.

The Fed's hawkish tone this week, coupled with political uncertainty in Europe, pushed the dollar near a one-month high, pressuring the euro. Investors are particularly focused on the BOJ's policy decisions regarding its ultra-low interest rates and potential changes to its bond-buying program.

A Reuters poll indicated that nearly two-thirds of economists expect the BOJ to start tapering its monthly bond purchases, currently set at around 6 trillion yen ($38 billion). The yen's significant depreciation to a 34-year low of 160.245 per dollar at the end of April prompted several rounds of intervention by Japanese authorities, totaling 9.79 trillion yen ($62.25 billion).

On the macroeconomic front, U.S. data released on Thursday showed an increase in new unemployment claims to a 10-month high, while producer prices unexpectedly fell in May. This followed a cooler-than-expected consumer inflation report on Wednesday and the Fed's revised dot plot, which reduced this year's rate-cut expectations from three to one.

Traders are now pricing in 50 basis points of rate cuts for this year, with a 68% chance of a cut in September, according to the CME FedWatch tool. Consequently, the U.S. dollar index, which measures the dollar against six major currencies, was last at 105.25, close to its one-month high of 105.46 touched earlier in the week, and is up 0.3% for the week.

In commodities, oil prices eased on Friday but were set for their first weekly gain in four weeks. Brent crude futures fell 0.62% to $82.26 per barrel, while West Texas Intermediate (WTI) U.S. crude futures dropped 0.69% to $78.08 per barrel. The market weighed the impact of prolonged higher U.S. interest rates against strong crude and fuel demand projections for the year.

(By Commoditiescontrol Bureau: 09820130172)

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