Asian stocks continued their upward trend as global equities rallied on the back of positive jobs data that indicated the US economy is on track for a soft landing. The yen strengthened after the Bank of Japan decided to keep interest rates unchanged.
The MSCI Asia Pacific Index saw gains, with stocks in Japan, South Korea, and Australia posting advances, although mainland Chinese shares saw a slight dip. Global stocks reached a new peak alongside US shares on Thursday.
The BOJ opted to maintain its current monetary policy settings, suggesting that it is in no rush to raise interest rates as it monitors the impact of its July increase on financial markets. Data released earlier showed that Japan’s key inflation gauge accelerated in August for the fourth consecutive month.
Market analysts are now closely watching Governor Ueda’s upcoming press conference for any hints on the central bank’s future monetary policy stance. Depending on the tone of the conference, there could be implications for the USD/JPY exchange rate.
Treasury yields remained stable on Friday, while the dollar’s strength index stayed within a narrow range.
A drop in US jobless claims to the lowest level since May signaled a healthy labor market despite slowing hiring rates. This news boosted risk appetite and alleviated concerns that the Fed may have been too hesitant in reducing borrowing costs during its recent rate cut.
In China, authorities are considering lifting some of the remaining restrictions on home purchases to stimulate the sluggish housing market. This move helped push the BI China Real Estate Owners and Developers Valuation Peer Group gauge higher.
Meanwhile, Chinese banks kept their benchmark lending rates steady for September, as policymakers refrained from implementing further monetary stimulus amid challenges faced by financial institutions due to record-low profit margins. The recent Fed rate cut has provided room for China to potentially increase monetary and fiscal stimulus to support the economy.
In other news, the European Union and China are intensifying discussions to avoid impending tariffs on electric cars ahead of an approaching deadline.
On Wall Street, banks are divided on the speed and extent of future Federal Reserve rate cuts. JPMorgan Chase & Co. predicts another 50 basis point reduction in November, while Goldman Sachs Group Inc. anticipates 25 basis point cuts at each meeting from November to June next year.
In Taiwan, property and construction stocks declined following the central bank’s decision to raise the amount of funds that banks must hold in reserve to cool the overheated property market.
Upcoming data releases include inflation figures for Hong Kong and foreign exchange reserves for India.
In the commodities market, gold prices stabilized near a record high, while oil was on track for its biggest weekly gain since April following the US rate cut.
Key events for the week include the Japan rate decision, Eurozone consumer confidence data, and Canada retail sales data.
Some of the notable market movements include:
Stocks:
– S&P 500 futures fell 0.1%
– Nikkei 225 futures rose 2%
– Japan’s Topix rose 1.4%
– Australia’s S&P/ASX 200 rose 0.4%
– Hong Kong’s Hang Seng rose 1.3%
– The Shanghai Composite fell 0.2%
– Euro Stoxx 50 futures fell 0.2%
– Nasdaq 100 futures fell 0.2%
Currencies:
– The Bloomberg Dollar Spot Index remained unchanged
– The euro was steady at $1.1165
– The Japanese yen strengthened by 0.3% to 142.16 per dollar
– The offshore yuan rose 0.3% to 7.0453 per dollar
– The Australian dollar was stable at $0.6819
Cryptocurrencies:
– Bitcoin rose 0.8% to $63,565.84
– Ether rose 1.1% to $2,493.88
Bonds:
– The yield on 10-year Treasuries remained steady at 3.71%
– Japan’s 10-year yield was unchanged at 0.850%
– Australia’s 10-year yield was stable at 3.92%
Commodities:
– West Texas Intermediate crude prices remained relatively unchanged
– Spot gold prices rose 0.2% to $2,592.04 an ounce
This article was created in collaboration with Bloomberg Automation and with assistance from Winnie Hsu.
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