News
Asian stocks rise, dollar falls as ECB comments increase risk appetite
By Stella Qiu
SYDNEY (Reuters) – Asian shares rose on Tuesday, while the dollar remained on the back foot for the third session in a row, as heightened expectations of an imminent cut in European rates helped sharpen risk appetite.
Gains were limited ahead of this week’s key inflation readings.
Europe is set for a slightly stronger opening, with EUROSTOXX 50 futures up 0.2%. That would build on overnight gains after a number of European Central Bank officials said the ECB has room to cut interest rates as inflation eases.
With the debate now shifting to subsequent moves, markets have fully priced in two rate cuts by October this year.
S&P 500 futures rose 0.1% and Nasdaq futures gained 0.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2% after a 0.9% rise on Monday. Taiwanese shares rose 0.5% to an all-time high, while Hong Kong’s Hang Seng Index pared some earlier gains, rising 0.1%.
Japan’s Nikkei, on the other hand, fell 0.2%, reversing part of the previous day’s 0.7% advance.
“We’re entering the northern hemisphere summer season. Traditionally, this is a time when markets tend to go into this drift mode,” said Tony Sycamore, analyst at IG.
Sycamore believes the Hang Seng is likely to rise further after a recent climb as the data will likely support further improvements in the Chinese economy. China will release surveys on May manufacturing and services activity on Friday.
“I like the idea of getting back into this trading on pullbacks and that’s something that I think has even more upside, whereas for me, for the Nikkei, there are question marks hanging over this market.”
He added that the Nikkei failed to return close to its all-time high in March and that there are signs that market participants are starting to withdraw money from the benchmark index to invest in Chinese markets.
This week’s big risk-on events won’t come until Friday, when US numbers on core personal consumption expenditures (PCE) – the Federal Reserve’s preferred measure of inflation – and euro zone inflation data will set the tone. for negotiations.
In currency markets, the dollar was on the back foot for the third session in a row, falling 0.1% against its major peers as traders awaited the PCE release.
The average forecast for April is an increase of 0.3% compared to the previous month, while annual expectations are for an increase of 2.8%, with downside risks.
The Japanese yen stabilized at 156.78 per dollar, only slightly stronger than the key level of 157. However, it continued to weaken against a number of high-yielding currencies, with the New Zealand dollar reaching a new 17-year high of 96.56 yen on Tuesday. [FRX/]
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Thanks to strong carry demand, the kiwi reached a two-and-a-half-month high of $0.6155.
The Treasury spot market returned from a slow holiday after falling last week.
Two-year yields fell 1.6 basis points to 4.9375%, having risen 13 basis points in the previous week, while the 10-year yield fell 1 basis point to 4.4610%, after rising 5 basis points in the previous week. last week.
Oil prices extended gains from the previous session. Brent futures rose 0.2% to $83.23 a barrel. US crude oil futures for July were at $78.84 per barrel, up 1.4% from Friday’s close, having traded during the US holiday.
Gold prices rose for a third day, rising 0.1% to $2,352.20 per ounce.
(Reporting by Stella Qiu; Editing by Jacqueline Wong and Edwina Gibbs)