Asian Markets Surge on Expectations of Fed Rate Cuts

Asian markets went up on Tuesday, fueled by hopes that the Federal Reserve will lower interest rates, and the yen fell.

Japan's Nikkei 225 went up by 1.6%, following the positive trend in Wall Street. Australian stocks also rose, adding to the positive vibe in the region. However, markets in Hong Kong and Shanghai went back and forth between gains and losses all day.

The yen dropped after Masato Kanda, Japan's top currency official, said there was no need for the government to step in if the market was working fine.

Global stock markets are feeling hopeful as investors think the Federal Reserve might cut rates, especially with the soft US job numbers. Plus, China's supportive policies are boosting Chinese stocks and the yuan.

Ray Sharma-Ong from abrdn Plc said Asia has more growth potential compared to the US, with cheaper prices and stronger currencies. He also mentioned that in the past, Asia has done well during Fed easing cycles.

Investors are cautiously optimistic about the Fed cutting rates this year, with the bond market reacting positively to signs of a cooling US labor market. Even though US 10-year Treasury yields remained stable, Australia's 10-year yield barely changed.

Australia is likely to keep its key interest rate unchanged, though with a cautious outlook due to steady consumer prices.

David Lefkowitz from UBS Global Wealth Management highlighted some factors supporting the stock market, like good profit growth and lower inflation, which makes the Fed more likely to cut rates. Also, there's more investment in artificial intelligence.

China's market got a boost from news that Shenzhen eased home buying rules to help its real estate market.

Looking ahead, this week's key events include various economic indicators and central bank decisions worldwide, which could affect the markets.

Market Highlights:

Stocks:

• S&P 500 futures were steady

• Japan’s Topix rose by 0.3%

• Australia’s S&P/ASX 200 went up for the fourth day

• Hong Kong’s Hang Seng didn’t change much

• The Shanghai Composite hit an eight-month high

• Euro Stoxx 50 futures continued their upward trend

Currencies:

• The Bloomberg Dollar Spot Index barely moved

• The euro stayed stable

• The Japanese yen dropped a bit

• The offshore yuan didn’t change much

Cryptocurrencies:

• Bitcoin went up by 0.9%

• Ether increased by 0.5%

Bonds:

• The yield on 10-year Treasuries stayed at 4.49%

• Australia’s 10-year yield barely changed

Commodities:

• West Texas Intermediate crude went up by 0.3%

• Spot gold stayed stable

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