Ankur Banerjee
SINGAPORE (Reuters) – Asian stocks rose broadly on Wednesday while the dollar remained steady as a weaker U.S. labor market bolstered bets the Federal Reserve will cut interest rates in September and investors awaited a crucial payrolls report later in the month. this week.
However, concerns over a cooling US economy kept risk appetite in check, while in Asia the focus remained on Indian markets, with stocks volatile on Wednesday after falling in the previous session as voting results showed weaker-than-expected gains. advantage in favor of victory. for Prime Minister Narendra Modi.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.76%, although it fell 1% as the Japanese yen strengthened again.
The buoyant mood in Europe is likely to continue, with futures for the Eurostoxx 50, German and other indexes rising 0.5%, ahead of PMI data for much of the region.
Data yesterday showed US job openings fell more than expected in April to the lowest level in more than three years, a sign that labor market conditions are easing.
The data emboldened bets on a rate cut this year, with markets pricing in 45 basis points of easing. Traders also put the likelihood of a rate cut in September at 65%, up from 46% a week earlier, CME’s FedWatch tool showed.
“I think there’s a strange trade-off between those who like this data as encouraging thoughts about rate cuts and those who are watching it happen and it’s not good news,” said Rob Carnell, ING’s regional head of research for Asia. -Pacific region.
“Asia wants to find some good news in the very mixed numbers we’re seeing.”
The market’s focus will now be on the US jobs report, which will be released on Friday.
The benchmark 10-year yield stood at 4.3435% on Wednesday, after hitting a nearly three-week low of 4.314% on Tuesday after jobs data. [US/]
The index, which measures the U.S. currency against six peers, remained steady at 104.21 but was close to a nearly two-month low of 103.99 hit on Tuesday. [FRX/]
The dollar’s unrelenting strength in the recent past will give way to modest weakness over the next 12 months, according to currency strategists in a Reuters poll, who generally agreed that the dollar is overvalued.
“Beyond the inflation data, however, bad news on economic growth is likely to remain bad news for the dollar unless recession fears intensify,” said Daragh Maher, head of US currency strategy at HSBC.
Dollar weakness helped the yen strengthen to a more than two-week high of 154.55 per dollar on Tuesday. It weakened to 155.57 on Wednesday.
In India, the Nifty 50 index struggled for direction in volatile trading after falling nearly 6% on Tuesday, its worst session in four years, with foreign investors offloading about $1.5 billion in shares.
Modi’s ruling Bharatiya Janata Party has lost its absolute majority in parliament for the first time in a decade and is depending on its regional allies to get past the halfway mark of governing the world’s largest democracy.
This has created some uncertainty about economic policy, including the push for investment-led growth that has been the cornerstone of the Modi government.
“While the BJP’s power may be weakened, it is still intact,” said Mark Matthews, head of Asia research at Bank Julius Baer. “The momentum in the economy from existing reforms is still strong and will not go away.”
In commodities, oil prices hit a four-month low as traders weighed OPEC+’s decision to increase supplies later this year and after fuel stockpiles increase.
Futures last traded at $77.49 a barrel, while U.S. West Texas Intermediate crude futures were down slightly at $73.19 a barrel. [O/R]