Investing.com reported that most Asian stocks experienced gains on Tuesday, fueled by optimism surrounding potential declines in U.S. interest rates. Leading the charge were Japan’s Nikkei 225 and South Korea’s KOSPI, both surging ahead in catch-up trade after a long weekend. The positive momentum was partly driven by softer-than-expected U.S. nonfarm payrolls data from Friday, which renewed speculation of interest rate cuts by the Federal Reserve. Technology stocks notably boosted these indexes.
Australian stocks also saw an extension of gains following the Reserve Bank of Australia’s less hawkish stance, indicating that further rate hikes might not be imminent in 2024. Despite this, U.S. stock index futures dipped slightly during Asian trade, with overall market gains in the region being tempered by cautiousness ahead of more insights on U.S. rates, particularly from Federal Reserve officials scheduled to speak later in the week.
While some Asian markets showed more restrained gains, concerns lingered as Fed officials emphasized the need for convincing evidence of declining inflation before any rate adjustments. Moreover, Australian inflation is projected to take longer to meet its annual target of 2% to 3%, although the RBA refrained from issuing explicit warnings about potential rate hikes, easing market concerns fueled by stronger-than-expected first-quarter inflation data.
Weak retail sales data for the first quarter in Australia also contributed to the tempered expectations of a hawkish RBA stance. Furthermore, the performance of some companies, like ANZ Group, which reported a modest profit for the first six months of the year, added to the cautious sentiment.
Chinese shares saw a modest rebound, with indices such as the Shanghai Shenzhen CSI 300 and Shanghai Composite showing slight movements after reaching five-month peaks in April. However, Hong Kong’s Hang Seng index experienced a slight decline following ten consecutive sessions of gains, which saw the index enter bull market territory from its February lows.
Looking ahead, futures for India’s Nifty 50 index indicated a subdued start after recording minor losses in the previous session. Overall, while optimism regarding potential U.S. interest rate cuts buoyed Asian markets, ongoing uncertainties and mixed signals from central banks and economic indicators tempered overall market sentiment.
