Today’s News
Asian markets saw a pullback on Wednesday as the recent strong rebound in global stocks took a breather. Investors turned cautious, focusing on upcoming U.S. economic data and central bank speeches expected to bolster the case for interest rate cuts.
Image Source: BBC
The S&P 500 ended its eight-day winning streak with a 0.2% drop, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell by 0.6%. In Hong Kong, the Hang Seng Index slumped 1.4%, driven by an 11% plunge in JD.com shares following reports that Walmart plans to sell its significant stake in the company.
Japan’s Nikkei opened down 1%, as its recovery from an early August collapse hit resistance around the 38,000 level, with further gains in the yen weighing on sentiment.
“The sell-off itself has largely corrected, and the recession scare has given way to soft landing hopes again,” said Bank of Singapore analyst Moh Siong Sim. “But now we are back to square one, and the market needs validation before it can be more relaxed, and that validation must come from data.”
Later on Wednesday, revisions to U.S. labor data are expected, with a significant downward adjustment anticipated, which could support the case for interest rate cuts. Additionally, purchasing managers’ index surveys for the U.S. and global markets are due on Thursday.
The dollar’s recent decline has driven gold prices to near-record highs and pushed the yen to 145.48 per dollar, a 1.6% gain for the week so far and about 11% higher than last month’s 38-year low. The euro also strengthened, reaching its highest level since early December at USD 1.1130.
Interest rate futures indicate a 25 basis point U.S. rate cut next month, with a possibility of a larger 50 basis point cut. “It is likely that the current softer tone of the greenback stems mostly from expectations that easier Fed policy is increasingly imminent,” said Rabobank strategist Jane Foley.
Federal Reserve Chair Jerome Powell is set to speak at the Jackson Hole symposium on Friday, a key event for market watchers. Meanwhile, the Australian and New Zealand dollars held onto recent gains.
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