Asian stocks brace for solid monthly gains, dollar slips on rising bets on US rate cuts By Reuters

By Rae Wee

SINGAPORE (Reuters) – Asian shares rose on Friday and were poised for a solid end to August, while the dollar stared its worst monthly performance in nine months as the Federal Reserve is almost certain to cut interest rates this month future .

The release of the core US personal consumption expenditure (PCE) price index, the Fed’s preferred measure of inflation, as well as a euro zone inflation reading later on Friday will be in focus and likely to provide further clues on to the main rates rate outlook. savings.

MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.44 percent and was set for a gain of nearly 2 percent for the month.

U.S. stock futures extended Wall Street’s positive run, with Nasdaq futures up 0.25 percent and advancing 0.12 percent.

Solid growth and resilience in the world’s largest economy outweighed investor disappointment over Nvidia’s (NASDAQ: ) disappointing results, which sent global tech stocks lower.

Taiwan’s benchmark and South Korea’s benchmark index, both tech-heavy, recovered from Thursday’s losses to last trade 0.35 percent and 0.62 percent higher, respectively.

“Overnight US data further undercuts recession fears,” said Alvin Tan, head of Asia FX Strategy at RBC Capital Markets.

Financial markets had a turbulent run in August after a series of weaker-than-expected US economic data at the start of the month fueled fears of an impending recession, forcing investors to ditch risky assets in search of safety.

Volatility was further exacerbated by the unraveling of yen-backed carry trades following the Bank of Japan’s (BOJ) unexpected rate hike, leading to a massive sell-off in global equities on August 5 that was reminiscent of the “Black” from October 1987. Monday”.

it has since recovered from the collapse earlier in the month, although it was still set to lose 1.4% for the month. The last increase was 0.6% on Friday.

The broader index similarly gained 0.6 percent, although it was heading for a monthly decline of more than 3 percent, its weakest since December 2022.

Data on Friday showed core consumer prices in the Japanese capital accelerated for a fourth straight month, keeping alive market expectations of further BOJ rate hikes in the coming months.

“Amid stabilizing market conditions, the market will undoubtedly mark its expectations for a Q4 BOJ rate hike,” RBC’s Tan said.

RELIEF CYCLE

The main focus for investors remains on the pace and extent of the Fed’s interest rate cuts this year, with those bets further strengthened after a chorus of Fed speakers signaled their intention to do so as early as next month.

Markets were expecting a cut of about 100 basis points by the end of the year, with about a 32.5% chance of a 50 basis point cut in September.

That left the greenback struggling as it tracked its biggest monthly decline since November on Friday.

Against the yen, the greenback was last at 144.78 and was set to lose more than 3% on the month as pressure on the Japanese currency eases on the prospect of narrowing interest rate differentials.

The euro ticked slightly higher to $1.1079, paring some of its 0.38% loss from the previous session, after weaker-than-expected German inflation data added to bets on further declines in rate of the European Central Bank (ECB).

“Germany is obviously quite a weight in the eurozone, so if we get a negative surprise on Germany, that can feed into the higher numbers,” said Rob Carnell, ING’s regional head of research for Asia-Pacific.

“The ECB has been humming a bit about a cut in September and whether or not there will be more after that. It makes it seem more likely.”

In commodities, oil prices rose slightly as investors weighed supply concerns in the Middle East against signs of weakened demand. (OR)

futures rose 0.06 percent to $79.99 a barrel, while U.S. West Texas Intermediate crude futures gained 0.14 percent to $76.02.

It fell 0.23 percent to $2,515.25 an ounce, although it was set for a 2.7 percent gain for the month, helped by the prospect of an impending Fed easing cycle and a weaker dollar. (EMPTY/)