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Global equity/currency market update: Asian Stocks Rise Amid Rate Cut Bets; Indian Markets in Focus

5 Jun 2024 8:50 am
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Mumbai, 5 Jun (Commoditiescontrol): Asian stocks rose on Wednesday, buoyed by growing bets on a U.S. interest rate cut in September due to signs of a softening labor market. However, concerns about a cooling U.S. economy tempered risk appetite. Investors are also closely watching Indian markets after a political setback for Prime Minister Narendra Modi's party affected stocks and the rupee.

MSCI's broadest index of Asia-Pacific shares outside Japan increased by 0.24%. Meanwhile, Japan's Nikkei fell 1% as the yen approached two-week highs. In China, the blue-chip CSI300 index remained mostly unchanged, while Hong Kong's Hang Seng index gained 1%.

A private sector survey revealed that China’s services activity in May grew at its fastest pace in ten months, with staffing levels rising for the first time since January, suggesting a sustained recovery in the second quarter.

Overnight, data showed that U.S. job openings in April fell more than expected to their lowest level in over three years, indicating a weakening labor market. This bolstered expectations for rate cuts this year, with markets pricing in 45 basis points of easing and a 65% chance of a September rate cut, up from 46% a week earlier, according to the CME FedWatch tool.

Benchmark 10-year U.S. Treasury yields stood at 4.3376% during Asian trading hours, down from a nearly three-week low of 4.314% on Tuesday following the jobs data. The dollar index, which tracks the U.S. currency against six major peers, was steady at 104.14, after nearing a two-month low of 103.99 on Tuesday.

FX strategists in a Reuters poll predicted minor dollar weakness over the next 12 months, acknowledging the currency's recent strength as overvalued. The dollar’s softness has allowed the yen to strengthen, reaching a two-week high of 154.55 per dollar on Tuesday before settling at 155.48 on Wednesday morning.

India's Nifty 50 index futures pointed to a subdued open following a nearly 6% drop on Tuesday, marking its worst session in four years. This plunge came as foreign investors sold approximately $1.5 billion in shares. Modi's Bharatiya Janata Party lost its parliamentary majority for the first time in a decade, now reliant on regional allies, which has introduced uncertainty over economic policies, including investment-driven growth initiatives.

In commodities, oil prices continued to slide in early Asian trading amid concerns over demand after an industry report showed increased U.S. crude and fuel stockpiles. Brent crude futures dipped 0.1% to $77.47 per barrel, while U.S. West Texas Intermediate crude futures fell to $73.16 per barrel. Gold prices edged up by 0.09% to $2,330 per ounce.

(By Commoditiescontrol Bureau: 09820130172)


       
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