Japan Powers Asian Stocks to Best Week in a Year – Asia Market Wrap

Asian equities soared as traders returned to risk assets amid growing optimism that the US economy will avoid a recession. The yen is poised for its worst week since May.

Almost all major market indexes rose in Asia, with one regional indicator poised for its biggest weekly performance in more than a year. Japanese stocks were among the best performers, as a weaker yen increased export earnings. The currency slid 1.3% against the dollar on Thursday and was trading near the 149 mark, calming concerns about a large carry trade unwind. US equities futures moved higher.

A flurry of US statistics this week, ranging from inflation to unemployment claims to retail sales, has soothed investors, bolstering the belief that the world’s largest economy is on track for a “Goldilocks” scenario in which inflation is contained without slowing growth. Global equities have fully recovered from their losses last week, when traders were concerned that the Federal Reserve would not drop interest rates quickly enough to prevent a recession.

Treasuries in Asia remained steady after Thursday’s drop, as hints of a healthy US economy in recent data releases caused traders to reduce bets for a big September rate cut. They are now pricing in less than a 30-basis-point cut next month, with a total reduction of 92 basis points predicted for the rest of 2024.