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Global equity/currency market update: Asian Stocks Set to Break Two-Week Losing Streak Amid Global Rate Cuts

7 Jun 2024 8:44 am
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Mumbai, 7 Jun (Commoditiescontrol): Asian stocks are poised to end a two-week losing streak on Friday, buoyed by a wave of monetary easing from major central banks. This comes as expectations rise that the U.S. Federal Reserve might soon follow suit.

The European Central Bank (ECB) delivered a widely anticipated rate cut on Thursday, following the Bank of Canada's move a day earlier, making it the first G7 nation to reduce its key policy rate. These banks join Sweden's Riksbank and the Swiss National Bank in initiating their respective monetary easing cycles, which has revitalized the global risk rally. This has fueled speculation that the Fed could also cut rates in September.

MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.3% in early trading, heading for a nearly 3% weekly gain. Hong Kong's Hang Seng Index rose 0.14%, while Chinese blue chips edged up 0.23%. Conversely, Japan's Nikkei slipped 0.16%.

Market movements were largely subdued as traders remained cautious ahead of the U.S. nonfarm payrolls report due on Friday. Analysts expect the world's largest economy to have added 185,000 jobs in the previous month.

The benchmark 10-year U.S. Treasury yield held steady at 4.2987%, while the two-year yield increased by about two basis points to 4.7386%, following six consecutive sessions of declines. This decline in yields has been driven by renewed expectations of imminent Fed rate cuts, spurred by data suggesting easing labor market conditions in the U.S. Markets are now pricing in roughly 50 basis points of easing from the Fed this year.

Elsewhere, the dollar lingered near an eight-week low against a basket of currencies, heading for a weekly loss of about 0.5%. The euro rose 0.05% to $1.0895, extending its slight gain from the previous session as the ECB raised its inflation forecasts, leaving investors uncertain about the timing of subsequent rate cuts. Against the dollar, the yen fell 0.1% to 155.79, but was on track for a weekly gain of nearly 1%.

In Japan, household spending rose for the first time in 14 months in April, although the modest growth indicated that consumers remained cautious amid higher prices.

In commodities, oil prices eased slightly, with Brent crude futures down 0.09% to $79.80 per barrel and U.S. West Texas Intermediate crude futures dipping 0.1% to $75.48 per barrel.

(By Commoditiescontrol Bureau: 09820130172)


       
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