Asian stocks hit record highs Thursday; sterling reached a four-month peak on strong growth, as traders anticipated easing U.S. inflation.
U.S. stocks reached new highs on Wednesday, and futures remained unchanged throughout the Asian session.
Bonds and the dollar remained steady, keeping the yen weak at 161 per dollar, near its lowest in decades.
The Nikkei climbed 1% to a record high of 42,426.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.2% to a two-year high.
Taiwanese equities reached a new high, and Australia’s ASX 200 finished just shy of its all-time high.
“The main driver is really the prospect of interest rate cuts,” said Shane Oliver, AMP’s chief economist and head of investment strategy in Sydney. “If we get a good inflation read, it will tick one of Powell’s boxes.”
Fed Chair Powell indicated to lawmakers that “more good data” could justify rate cuts, with futures showing a 75% chance in September.
Economists expect the annual U.S. CPI to fall to 3.1% in June from 3.3% in May.
The Bank of Korea held interest rates; however, Governor Rhee Chang-yong hinted at preparing for potential rate cuts.
A tone shift at the Reserve Bank of New Zealand on Wednesday sharply altered rate-cut expectations, with the two-year swap rate diving 18 basis points and the currency falling.
Malaysia will likely keep rates steady today, as U.S. earnings season starts with Delta Air Lines and PepsiCo, followed by banks on Friday.
China stocks rose with market momentum Thursday; however, disappointing data and tariff talks hinder sustained rallies. GDP report due Monday.
Hong Kong’s Hang Seng rose 1%, while mainland CSI300 climbed 1.1%, though it remains near Tuesday’s 4.5-month low.
China’s yuan recovered from an almost eight-month low to 7.2701 per dollar.
Sterling firmed, hitting a four-month high of $1.2866, as BOE’s chief economist hinted at delayed rate cuts and strong GDP data.
Other changes were small ahead of the US CPI release.
The euro edged higher to $1.0835.
The yen fell to 161.7 per dollar as Japan’s core machinery orders unexpectedly dropped again, challenging interest rate hike expectations.
The New Zealand dollar, backed by its 200-day moving average, traded at $0.6095. Meanwhile, the Australian dollar reached a six-month peak at $0.6763, up 0.2%.
Overnight and in Asia, Treasury yields remained stable: U.S. two-year at 4.62%, with benchmark 10-year at 4.29%.
Oil prices rose with signs of robust U.S. gasoline demand. Brent futures increased by 0.8% to $85.79, while U.S. crude climbed to $82.77, up 0.8%.
Wheat futures are nearing two-and-a-half-month lows due to favorable weather conditions in the United States.
Gold rose 0.5% to $2,381 per ounce. Following a selloff last week, bitcoin has stabilized around $58,900.
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