Asian Stocks Advance Amid Dollar's Decline vs Fed's Rate Outlook
Asian equities saw positive momentum on Tuesday, coupled with the US dollar hitting a three-month low, reflecting investor confidence in the Federal Reserve's completion of the interest rate hike cycle. The focus remains on a pivotal inflation report slated for later this week.
MSCI's broadest index of Asia-Pacific shares outside Japan recorded a 0.39% increase, signaling an impressive nearly 7% surge in November – the strongest monthly performance since January.
Japan's Nikkei, despite a 0.20% slip, achieved an 8% gain for the month, marking its most robust monthly performance in three years.
Rodrigo Catril, Senior FX Strategist at the National Australia Bank (NABZY), emphasized the significant role of central bank policy outlook in boosting risk appetite in November.
Indicators of easing inflationary pressures align with the belief that numerous central banks have concluded their tightening cycles, setting the stage for anticipated interest rate cuts next year, as stated by Catril.
Current market expectations suggest a 96.8% likelihood that the US central bank will maintain interest rates next month. The likelihood of rate cuts is projected to increase in mid-2024, according to CME's FedWatch tool.
Investors will closely monitor the Fed's preferred inflation gauge on Thursday and eurozone consumer inflation data this week for a clearer understanding of inflation trends.
European Central Bank President Christine Lagarde, on Monday, asserted that the central bank's efforts to control price growth are ongoing. She cited robust wage growth and lingering uncertainties, even as inflation pressures ease in the eurozone.
Fed Chairman Jerome Powell's Friday speech will be scrutinized for insights into potential future interest rate directions.
China's CSI 300 index declined by 0.23%, and Hong Kong's Hang Seng Index dropped by 0.70% a day after data indicated slower profit growth in Chinese industrial companies for October.
Monday's US data revealed a larger-than-expected decline in new home sales for single-family homes in October due to higher mortgage rates. However, the housing segment remained supported by persistent shortages of available properties.
Weaker-than-expected data impacted Treasury bond yields, with the 10-year benchmark yield shedding 9.6 basis points on Monday. During Asian hours, they rose by 1.6 basis points to 4.404%.
The US Dollar Index, gauging the greenback against a basket of currencies, declined to 103.11, its lowest since August 31. The Japanese yen gained 0.28%, reaching 148.25 per USD.
Oil prices rebounded on Tuesday following a significant decline the previous day, with investors anticipating the OPEC+ meeting this week and potential supply constraints in the coming year.
US crude oil rose by 0.31% to $75.09 per barrel, and Brent returned above $80.00. Gold spot prices increased by 0.1% to $2,015.00 per ounce, slightly below the three-month high reached on Monday.
MSCI's broadest index of Asia-Pacific shares outside Japan recorded a 0.39% increase, signaling an impressive nearly 7% surge in November – the strongest monthly performance since January.
Japan's Nikkei, despite a 0.20% slip, achieved an 8% gain for the month, marking its most robust monthly performance in three years.
Rodrigo Catril, Senior FX Strategist at the National Australia Bank (NABZY), emphasized the significant role of central bank policy outlook in boosting risk appetite in November.
Indicators of easing inflationary pressures align with the belief that numerous central banks have concluded their tightening cycles, setting the stage for anticipated interest rate cuts next year, as stated by Catril.
Current market expectations suggest a 96.8% likelihood that the US central bank will maintain interest rates next month. The likelihood of rate cuts is projected to increase in mid-2024, according to CME's FedWatch tool.
Investors will closely monitor the Fed's preferred inflation gauge on Thursday and eurozone consumer inflation data this week for a clearer understanding of inflation trends.
European Central Bank President Christine Lagarde, on Monday, asserted that the central bank's efforts to control price growth are ongoing. She cited robust wage growth and lingering uncertainties, even as inflation pressures ease in the eurozone.
Fed Chairman Jerome Powell's Friday speech will be scrutinized for insights into potential future interest rate directions.
China's CSI 300 index declined by 0.23%, and Hong Kong's Hang Seng Index dropped by 0.70% a day after data indicated slower profit growth in Chinese industrial companies for October.
Monday's US data revealed a larger-than-expected decline in new home sales for single-family homes in October due to higher mortgage rates. However, the housing segment remained supported by persistent shortages of available properties.
Weaker-than-expected data impacted Treasury bond yields, with the 10-year benchmark yield shedding 9.6 basis points on Monday. During Asian hours, they rose by 1.6 basis points to 4.404%.
The US Dollar Index, gauging the greenback against a basket of currencies, declined to 103.11, its lowest since August 31. The Japanese yen gained 0.28%, reaching 148.25 per USD.
Oil prices rebounded on Tuesday following a significant decline the previous day, with investors anticipating the OPEC+ meeting this week and potential supply constraints in the coming year.
US crude oil rose by 0.31% to $75.09 per barrel, and Brent returned above $80.00. Gold spot prices increased by 0.1% to $2,015.00 per ounce, slightly below the three-month high reached on Monday.
