Quick Look:
- Nikkei 225 up 0.3%, Hang Seng down 1.6%, Shanghai Composite down 0.9%, S&P/ASX 200 down 1.6%.
- S&P 500 up 0.3%, Nasdaq up 0.3%, and Dow Jones up 0.2%, influenced market by mixed economic data.
- Onshore yuan weakens, pound steady, British inflation hits 2%, potential rate cuts anticipated.
Asian stock markets exhibited a mixed performance ahead of the Federal Reserve’s upcoming meeting and the release of U.S. inflation reports. Investors remain cautious, monitoring these key events closely for indicators that might influence market direction. The Nikkei 225 edged up by 0.3%, reaching 39,155.16, buoyed by an upward revision of Japan’s economic data and the continuing weakness of the yen. Investors are also eagerly awaiting the Bank of Japan’s meeting outcome. Notably, the central bank had previously raised the benchmark interest rate to 0.1% in March. Conversely, the Hang Seng index in Hong Kong dropped by 1.6%, closing at 18,079.93, while the Shanghai Composite fell by 0.9% to 3,022.96. Australia’s S&P/ASX 200 also declined, shedding 1.6% to end at 7,735.50. On a more positive note, South Korea’s Kospi gained 0.4%, reaching 2,710.61.
US Market: S&P 500 and Nasdaq Each Up 0.3%, Dow Jones Rises 0.2%
In the United States, futures and oil prices experienced declines. Despite this, major indices showed some gains. The S&P 500 rose by 0.3% to 5,360.79, the Nasdaq composite increased by 0.3% to 17,192.53, and the Dow Jones Industrial Average increased by 0.2%, closing at 38,868.04. These movements reflect mixed economic data from the U.S., where strong job reports contrasted with weaker manufacturing and other sectors’ performance. There is a pronounced divide in U.S. consumer spending patterns, with lower-income households facing challenges while higher-income households continue to perform better. This disparity adds complexity to the overall economic outlook and influences market sentiment. Asian stocks have approached their highest levels in two years, supported by technology stocks, which saw a 4% rise in June. The MSCI Asia-Pacific index remained steady at 572.97.
Onshore Yuan Weakens the Market Past 7.26 Per Dollar
In currency markets, the onshore yuan weakened past 7.26 per dollar, while the pound held steady at $1.2717, having decreased by 0.2% in June. British inflation hit the 2% target in May, indicating strong underlying price pressures. Economists predict that the Bank of England (BoE) might cut rates in August, with market sentiment showing a 30% chance of this happening then, though it is more likely in September or November. The market is pricing in a 43-basis-point easing from the BoE this year. The Swiss National Bank is expected to cut its key policy rate by 25 basis points, whereas Norway’s central bank will likely maintain its current policy interest rate. Tech stocks, particularly Nvidia, have surged, lifting the company’s market capitalisation above Microsoft’s. Nasdaq futures rose by 0.25% in early Thursday trading.
Brent Oil Steady at $85.08, WTI Crude Slightly Down to $81.42
Investors are keenly observing potential cues regarding Federal Reserve policy easing. The dollar index remained steady at 105.23, while the euro stayed at $1.0746. The Japanese yen traded at 158.05 per dollar, declining by over 10% this year. The Brent oil price held steady at $85.08 per barrel, and U.S. West Texas Intermediate crude for June dropped slightly by 0.18%, settling at $81.42 per barrel. As markets navigate through these economic indicators and central bank meetings, the overall sentiment remains one of cautious optimism mixed with uncertainty. The direction of future policies from key financial institutions, particularly the Federal Reserve, will likely play a pivotal role in shaping market trends in the coming months. Investors continue to hope for a stabilising slowdown in economic activity that avoids tipping into a recession, with a keen eye on the global economic landscape.
