Investing.com – Most Asian stocks rose on Tuesday on persistent optimism about a possible U.S. interest rate cut, with indexes in Japan and South Korea leading their peers in catch-up trading.
Attention also turned to later in the day, when the central bank is expected to keep rates steady but be more aggressive.
Regional markets received positive messages from Wall Street, especially with gains in the technology sector following a string of strong first-quarter earnings in recent sessions.
But U.S. stock index futures fell slightly in Asian trade, while overall gains in regional markets were also capped ahead of fresh signals on U.S. rates, especially from Federal Reserve officials due to speak later this week.
Nikkei and KOSPI increased catch-up trading volume
Japan and South Korea were the best performers in Asia on Tuesday, rising 1.2% and 1.9% respectively.
Both indexes rose in catch-up trading after the long weekend, with their gains largely in response to softer-than-expected US data on Friday. Technology stocks had the biggest impact on both indexes.
Friday’s jobs data provided a key point of support for Asian markets as traders again began assessing a potential interest rate cut by the Federal Reserve. Traders expect the Fed to cut rates by 25 basis points in September.
Gains in other Asian markets were somewhat limited on Tuesday, especially after Fed officials warned that while the central bank will eventually cut rates this year, it still needs more convincing evidence that inflation is falling. New Fed speakers will also be invited this week.
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ASX 200 rises as falling retail sales undermine RBA’s aggressive rates
Australia’s index added 0.4% as weak first-quarter data showed domestic spending was slowing, a trend that is expected to keep inflation lower in coming months.
The data raised some doubts about how aggressive the Reserve Bank of Australia’s stance will be at its policy meeting later in the day, given that spending appears to be easing.
The RBA is expected to leave rates unchanged but potentially adopt a hawkish tone following better-than-expected first-quarter inflation data. Any hawkish signals from the RBA bode bad news for Australian shares.
Some weak earnings also limited profits. ANZ Group (ASX:) shares fell 0.9% after averaging profits for the six months to 31 March.
Broader Asian markets were muted. The recovery in Chinese stocks appears to have fizzled out, with them posting small moves since hitting five-month peaks in April.
Hong Kong’s index fell 0.4% after rising for 10 straight sessions, during which the index also entered a bull market from February lows.
India index futures posted a muted opening after the index posted slight losses in the previous session.