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Global equity/currency market update: Asian Markets Fall Amid Cautious Global Monetary Outlook and Geopolitical Tensions

23 May 2024 8:52 am
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Mumbai, 23 May (Commoditiescontrol): Several major Asian share benchmarks declined on Thursday as investors grappled with the implications of a cautious approach to monetary easing by policymakers in response to persistent inflation.

MSCI's broadest index of Asia-Pacific shares outside Japan fell by 0.57%. Australia's S&P/ASX 200 index was among the biggest losers, dropping 0.8% due to a retreat in commodity prices.

Geopolitical tensions added to investor jitters as China's military commenced two days of "punishment" drills around Taiwan following the inauguration of Taiwan's new President Lai Ching-te. Despite this, Taiwan's stock market remained resilient, rising 0.3%.

The release of more hawkish-than-expected minutes from the Federal Reserve's latest policy meeting, alongside higher-than-anticipated inflation data from the UK and a stark assessment of New Zealand's inflation challenges, led investors to scale back expectations for rapid and substantial global rate cuts this year.

U.S. futures received a boost from Nvidia's forecast of higher-than-expected quarterly revenue, which propelled its shares up 5.9% in extended trading. Consequently, S&P 500 futures rose by 0.3%, and Nasdaq futures gained 0.57% in Asian trading.

Japan's Nikkei increased by 0.6%, benefiting from a weaker yen, which hit its lowest level in over three weeks, trading at 156.85 per dollar. Meanwhile, the British pound and New Zealand dollar remained near two-month highs, last trading at $1.2721 and $0.6102, respectively.

In the UK, inflation data showed a slower-than-expected decrease, with core price measures barely falling, prompting investors to reconsider the likelihood of a Bank of England rate cut next month. Similarly, the Reserve Bank of New Zealand surprised markets by indicating that rate cuts were unlikely until late 2025, despite holding its cash rate steady as expected.

Elsewhere in Asia, Hong Kong's Hang Seng Index fell 1.5% due to profit-taking after reaching a nine-month high earlier in the week, while China's blue-chip index declined by 0.3%.

Gold prices dipped by 0.25% to $2,372.28 per ounce, pulling back from a record high of $2,449.89 reached on Monday, as the prospect of prolonged higher U.S. rates reduced the metal's appeal. Crude oil prices also fell, with Brent crude down 0.82% to $81.23 per barrel and U.S. crude decreasing by 0.9% to $76.87 per barrel.

(By Commoditiescontrol Bureau: 09820130172)

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