Tokyo, Japan – Asian stocks rose on Monday following gains in the US market, as optimism grew over a potential rate cut by the Federal Reserve this year. Markets in Hong Kong, China, Australia, South Korea, and Japan all saw advances, while US equity futures remained relatively unchanged.
The positive turn in the stock market follows a week of losses in the Asian stocks, driven by uncertainty surrounding the Fed’s rate decision and concerns about a property rescue plan in China. In Japan, the yen strengthened slightly against the dollar as the Bank of Japan affirmed its cautious approach to managing inflation expectations at 2%.
On Wall Street, a sense of relief was felt as data from the University of Michigan indicated a decrease in consumer inflation expectations to 3.3% annually, down from the previous 3.5% forecast. The potential for a rate hike by the Bank of Japan later in the year was also factored into the currency market, with the yen hovering around 157 per greenback.
Federal Reserve Chair Jerome Powell and colleagues continue to emphasize the need for further evidence of sustained inflation progress towards the 2% target before considering a rate cut. Meanwhile, the dollar saw a slight decline in Asia, while trading of cash Treasuries was closed for the day. With US markets shut for the Memorial Day holiday, the “T+1” rule will come into effect upon the return of traders from the extended weekend, allowing US equities to settle in one day instead of two.
Looking ahead, investors will be closely monitoring industrial profits and PMI data from China, as well as inflation reports from Australia, Japan, and the Eurozone to assess the global economic landscape. Oil and gold prices experienced marginal increases amid ongoing supply constraints and increased demand, with commodity market participants anticipating discussions on supply cuts by the Organization of Petroleum Exporting Countries and its partners scheduled for June 2.
Key events scheduled for the week include speeches by central bankers, economic surveys, and data releases from various countries, all of which will contribute to shaping market sentiment and investor decisions. As markets continue to navigate through uncertainties, the focus remains on indicators that offer insights into the health of the global economy and the direction of monetary policy.