Asian Stocks Edge Higher as Fed Rate-Cut Bets Build – Asia Market Wrap
Asian stocks swung between small gains and losses ahead of the Federal Reserve’s policy decision with investors speculating the central bank will cut interest rates for the first time this year.
The MSCI Asia Pacific Index reversed earlier losses to gain 0.1%. Chinese technology stocks listed in Hong Kong jumped to their highest level in four years as optimism over artificial intelligence fueled demand.
Gold steadied after it rose above the $3,700-an-ounce level for the first time, buoyed by a weaker dollar. A gauge of the currency was little changed after two days of declines that pushed the index to around levels last seen in March 2022. In Japan, a 20-year government bond auction drew the strongest demand since 2020 as higher yields lured investors.
Attention is firmly on the Fed meeting with investors seeking clues on the path of interest rates that will shape the outlook in the months ahead. Some bond traders have stepped up options wagers that the central bank will deliver at least one half-point cut across this year’s three remaining policy meetings.
In Japan, the bond sale was the first test of demand for new super- long bonds since Prime Minister Shigeru Ishiba announced his resignation, a move that paves the way for successors who may favor more expansionary fiscal policies.
Meanwhile, money markets are fully pricing in a quarter-point Fed reduction, and a series of interest-rate cuts over the next year. An outlook echoing that view would be an encouraging sign for stock bulls, who have largely banked on a gradual easing path that keeps the economy from sliding into a recession.
