TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Asian stocks stutter, dollar drifts as US rate cut bets rise
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
A trader works on the floor of the New York Stock Exchange in the United States during morning trading on Dec. 13, 2023, the day of the Federal Reserves final policy meeting of the year. (Getty Images/AFP/Michael M. Santiago)
A
sian stocks traded tentatively on Tuesday, while the dollar lurked near a five-month low as cooling US inflation bolstered bets the Federal Reserve would cut interest rates soon.
Investors were still digesting data released on Friday that showed US prices fell in November for the first time in more than 3-1/2 years, underscoring the economy's durability.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.18 percent higher, on course for a 1.6 percent gain this year. Japan's Nikkei eased 0.07 percent but remains the best performing Asian stock market with a 27 percent gain for the year.
Trading is likely to be thin on the day after Christmas with several markets, including those in Australia, New Zealand and Hong Kong closed for the Boxing Day holiday.
Stock investors have cheered recent signs from the Fed on the outlook for rates. At the conclusion of its policy meeting on Dec. 13, the Fed signaled that it had reached the end of its tightening cycle and opened the door to interest rate cuts in the coming year.
"The Federal Reserve has aggressively changed its rhetoric to engineer a significant easing of financial conditions," Citi analysts said in a note.
"A combination of slower core inflation and rising recession concerns led Fed officials to shift rhetoric away from a commitment to fight inflation with higher-for-longer rates and toward reassuring markets that they will not 'hang on' to higher rates for too long."
Markets are now pricing in a 75 percent chance of a 25-basis-points rate cut from the Fed in March, according to the CME tool, compared with a 21 percent chance at the end of November. Markets are also pricing in more than 150 basis points of rate cuts next year.
In Asia, China stocks eased 0.12 percent in early trading, with online gaming companies still reeling from new rules to curb spending on video games, while Hong Kong's Hang Seng Index remained closed.
In the currency market, moves were muted in holiday-thinned trade, with the dollar index at 101.65, not far from the five-month low of 101.42 it touched on Friday. The index is down 1.8 percent for the year, on course to snap its two-year winning run.
The yen meanwhile was steady at 142.30 per dollar. The prospect of the Bank of Japan (BOJ) soon ending its ultra-easy policy has helped lift the currency in recent weeks.
The Asian currency is up 4 percent this month, on course for second straight month of gains against the dollar. But for the year, the yen remains down 7.8 percent against the greenback.
Bank of Japan Governor Kazuo Ueda said on Monday the likelihood of achieving the central bank's inflation target was "gradually rising" and it would consider changing policy if prospects of sustainably achieving the 2 percent target increase "sufficiently".
In commodities, US crude rose 0.1 percent to $73.63 per barrel and Brent was at $79.06, down 0.42 percent on the day in light trading as investors kept a watchful eye on tensions in the Middle East after Houthi attacks on ships disrupted global shipping and trade.
