Kevin Buckland
TOKYO (Reuters) – Asian shares rose on Thursday while bond yields fell as investors weighed cooling U.S. inflation and a more aggressive stance from the Federal Reserve, although European shares were expected to open lower.
Japanese shares were weak and the yen was lower against the dollar as the Bank of Japan began its two-day policy meeting.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, with Taiwan shares jumping as much as 1.8% to a record and Hong Kong shares rising 0.5%, helped by US and tech shutdowns. Nasdaq company at a record high. Overnight.
However, pan-European STOXX 50 futures were down 0.26% as of 05:55 GMT.
US futures pointed to further gains, rising 0.2%, while Nasdaq futures added 0.65%.
fell 0.25% after initial tech gains failed.
Mainland Chinese shares also weakened, with the blue-chip CSI 300 shedding 0.37% as EU tariffs on imports of Chinese electric vehicles heightened trade tensions.
“Ultimately, I think markets prefer strong and sustained economic growth without rate cuts rather than unsustainable growth with multiple rate cuts,” said David Chao, global markets strategist at Invesco Asia Pacific.
“We’re in a situation where I don’t think it really matters to the markets when the first (Fed) rate cut happens—the markets can still perform well.”
Wall Street rose sharply overnight while dollar and Treasury yields fell early in the US session after a closely watched CPI report showed benchmark prices rising at the slowest annual pace in more than three years last month.
But investors were later shocked when Federal Reserve officials cut their forecasts for interest rate cuts this year to one quarter-point cut.
At his post-meeting press conference, Fed Chairman Jerome Powell said the decision on the path of interest rates was a “close call” for many policymakers, and to some extent, the later start of rate cuts this year was offset by additional cuts in 2025. .
“The Fed has changed its mind several times about its expected policy path, so we don’t put much weight on its new set of forecasts,” said Jean Boivin, head of the BlackRock Investment Institute (NYSE:).
“Coming inflation surprises… are likely to continue to lead to significant revisions to the policy outlook. And with little clarity from central banks about the path forward, markets have become prone to react sharply to individual data.”
The index stood at 4.325% on Thursday, after being as high as 4.41% on Wednesday before falling to 4.25% for the first time since April 1 following a CPI surprise.
Australia’s 10-year yield fell 10 bps. up to 4.196%.
Japanese 10-year bond yields fell as much as 3 bps. to 0.955% for the first time since May 17.
The Nikkei newspaper reported that the Bank of Japan is likely to discuss cutting its monthly bond purchases at a policy meeting that ends on Friday, echoing previous reports from Reuters and other news outlets.
The yen underperformed the dollar noticeably overnight, while most other major currencies posted significant gains.
The yen lost 0.3% to 157.17 per dollar, erasing a 0.28% gain on Wednesday.
Meanwhile, the euro held steady at $1.0803 after strengthening 0.64% overnight.
The index, which measures the U.S. currency against the euro, the yen and four other major currencies, added 0.14% to 104.84, after falling 0.54% on Wednesday.
Gold fell 0.53% to $2,310.30 an ounce.
fell under pressure after a stronger-than-expected rise in US inventories.
Futures fell 0.31% to $82.34 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 0.29% to $78.27. Both benchmark indexes rose about 0.8% on Wednesday.