Asian Stocks Pause Amid Yen Weakness, Oil Slips as Investors Await Fed Signals

Asian stock markets took a breather on Thursday after a strong rally in recent weeks, as investors searched for new catalysts to drive further gains. Japan’s Nikkei added a modest 0.2%, following a 7% surge over the month, while MSCI’s broadest Asia-Pacific index outside Japan slipped 0.1% after rallying 5% this month. Analysts noted that fresh news or economic data to sustain momentum was largely missing.

Meanwhile, the Japanese yen faced pressure against major currencies, notably the euro and Swiss franc. Traders who had bet on a weaker dollar/yen movement were caught off guard following the Bank of Japan’s recent hawkish stance, pushing the euro to over a one-year high at 174.66 yen and the Swiss franc to record levels. Market watchers suggest the moves highlight ongoing challenges for currency markets amid shifting global monetary policies.

Oil prices pulled back slightly after earlier gains, with U.S. crude dropping 0.4% to $64.73 per barrel and Brent crude falling 0.3% to $69.11. The market had reacted to a surprise drop in U.S. crude inventories alongside supply concerns stemming from export issues in Iraq, Venezuela, and Russia. Gold prices remained largely flat at $3,739 an ounce, pressured by a stronger U.S. dollar.

Investor attention is turning toward upcoming U.S. economic data and Federal Reserve signals. San Francisco Fed President Mary Daly indicated further rate cuts may be needed, though the timing remains uncertain. With Wall Street booking profits from record highs, futures markets still imply a strong chance of a Fed rate cut in October, though the expected easing has recently softened.

Chinese shares stood out with strong performance, as blue-chip stocks rose 0.7% and Hong Kong’s Hang Seng added 0.2%. Chinese tech stocks extended an eight-week winning streak, driven by optimism in artificial intelligence and technology innovation. Analysts emphasize that while regional markets have benefited from positive momentum, volatility in currencies, commodities, and U.S. monetary policy continues to pose potential risks.

source: Reuters