The Asian markets displayed a mixed trend on Tuesday, influenced by a cautious performance on Wall Street. Profit-taking activities curbed expectations for potential Federal Reserve interest rate cuts in the upcoming year. Traders awaited key U.S. inflation data scheduled for release later in the week.
Recent economic indicators indicating a slowdown, along with lower-than-expected consumer price increases, have raised hopes that the Federal Reserve might have concluded its cycle of raising borrowing costs. This has led to speculation that policymakers have successfully balanced managing inflation and avoiding an economic downturn. However, some analysts expressed concerns that these indicators might signal future weakness.
Apart from the eagerly awaited personal consumption expenditures (PCE) price index, which serves as the Fed’s preferred gauge for inflation, investors are also focusing on other data this week, including consumer confidence and gross domestic product figures. Additionally, several central bank officials, including Fed chief Jerome Powell, are scheduled to speak. It is expected that they will maintain their stance, emphasizing that their policy decisions will be data-driven, and they anticipate keeping rates relatively high to control inflation.
Chris Larkin from E*Trade at Morgan Stanley noted that the market seems inclined towards the idea that declining economic data could prompt favorable rate cuts, despite the Fed’s communicated intentions. He mentioned that the forthcoming week will provide ample opportunities for traders to assess whether this cooling trend remains consistent. Market data indicates an anticipated reduction of nearly one percentage point in rates through the next year, with U.S. Treasury yields continuing to decline from last month’s 16-year highs.
In the Asian morning trade, Hong Kong, Tokyo, and Singapore witnessed declines, while Shanghai remained relatively stable. On the other hand, Sydney, Seoul, Wellington, Taipei, Manila, and Jakarta experienced gains. The anticipation of reduced rates has weighed on the dollar, which extended its losses against the yen and pound. In addition to monitoring rate-related developments, traders are also closely observing the oil market, particularly as OPEC and its major allies prepare for a meeting postponed until November 30 due to reported objections from some African nations concerning proposed production cuts by Saudi Arabia.
Saudi Arabia and Russia are reportedly contemplating further output reductions in the new year to bolster oil prices, which have dipped due to economic slowdowns and weakening demand.
Key Figures Around 0230 GMT:
- Tokyo – Nikkei 225: DOWN 0.2 percent at 33,370.40 (break)
- Hong Kong – Hang Seng Index: DOWN 0.2 percent at 17,485.79
- Shanghai – Composite: FLAT at 3,031.86
Currency Exchange Rates:
- Dollar/yen: DOWN at 148.26 from 148.64 yen on Monday
- Euro/dollar: DOWN at $1.0954 from $1.0958
- Pound/dollar: UP at $1.2632 from $1.2627
- Euro/pound: DOWN at 86.72 pence from 86.75 pence
Oil Prices:
- West Texas Intermediate: UP 0.6 percent at $75.29 per barrel
- Brent North Sea crude: UP 0.6 percent at $80.42 per barrel
Closing Figures from Previous Sessions:
- New York – DOW: DOWN 0.2 percent at 35,333.47
- London – FTSE 100: DOWN 0.4 percent at 7,460.70