Mumbai, 5 Jul (Commoditiescontrol): Asian share markets soared to new highs on Friday as investors anticipated potential U.S. rate cuts in September. The upbeat mood was also fueled by the euro reaching a three-week peak ahead of the French elections.
Sterling remained firm at $1.2767, with Britain’s Labour Party poised for a sweeping victory after 14 years of Conservative rule. The dollar weakened slightly, and Treasury yields edged higher as U.S. trade resumed post-Independence Day holiday.
Japan's Nikkei and Topix indices both climbed to record levels, while Taiwan's benchmark also hit new highs. MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.2% to a two-year high, supported by Samsung's forecast of a more than 15-fold rise in second-quarter profit, which propelled South Korea's KOSPI to a similar peak. Singapore's Straits Times index, bolstered by banking and property sectors, gained over 3% in three days, achieving two-year highs.
In Japan, household spending unexpectedly dropped in May, raising concerns about the interest rate outlook, particularly due to the weak yen reducing consumer purchasing power. The yen edged up to 160.9 per dollar.
FTSE futures rose 0.3% on Friday, and S&P 500 futures suggested a slight increase, indicating potential new records for the cash index later in the day. The U.S. employment data, anticipated to show a slowdown in hiring and a minor rise in unemployment, kept the door open for potential rate cuts. Recent subdued data, including the U.S. ISM services activity measure hitting its lowest since mid-2020, increased the probability of a September rate cut to 73%, with 47 basis points of cuts expected this year.
In the Asian morning, two-year U.S. Treasury yields rose by 1.3 basis points to 4.71%, while 10-year yields increased by 2 basis points to 4.37%.
In currency markets, the euro climbed to $1.0817, supported by polls suggesting France's far-right National Party would fall short in the parliamentary runoff. The Australian dollar reached a six-month high of $0.6738, driven by yield spreads and expectations of potential rate hikes due to persistent inflation.
Commodities also benefited from a weaker dollar, with gold poised for its largest weekly gain in a month, up 1.4% to $2,357 an ounce. Oil prices remained high, with Brent crude futures above $87 a barrel, reflecting strong demand as the U.S. summer driving season begins. Bitcoin, however, fell by 2%, trading near a four-month low at $56,955.
(By Commoditiescontrol Bureau: 09820130172)
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