Asian Stocks Climb as Risk Sentiment Rebounds: Markets Wrap

(Bloomberg) — Asian stocks tracked gains in US peers as an easing in US consumer inflation expectations bolstered the case for the Federal Reserve to cut rates this year.

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Markets in Australia, South Korea and Japan posted modest gains on Monday, while futures for Hong Kong equities also gained. Contracts for US stocks were little changed in early Asian trading.

The renewed optimism came after a gauge of Asian stocks suffered their worst week in more than a month. The moves came as concerns over whether the Fed will cut this year mounted along with doubts over the implementation and effectiveness of a property rescue package in China.

“Given the rebound in US markets, you’ll see Asian bourses open reasonably well,” said Tony Sycamore, an analyst at IG Markets in Sydney. “Risk sentiment looks reasonably good today.”

In Japan, the yen traded slightly stronger against the dollar as Bank of Japan Governor Kazuo Ueda said Monday that the central bank’s challenge is to determine the neutral interest rate. The yen fluctuated around 157 per greenback, as markets priced in a chance of another rate hike by the BOJ this year.

Wall Street got a degree of relief as University of Michigan data showed consumers expect prices to climb at a 3.3% annual rate over the next year, down from the 3.5% expected earlier in the month. Later this week, the Federal Reserve’s first-line inflation gauge – due on Friday— is set to show some modest relief from stubborn price pressures.

Federal Reserve Chair Jerome Powell and his colleagues have stressed the need for more evidence that inflation is on a sustained path to their 2% goal before cutting the benchmark interest rate, which has been at a two-decade high since July.

The dollar edged lower in Asia on Monday while the trading of cash Treasuries was closed. With US markets closed Monday, the “T+1” rule will come into effect when traders come back from the holiday weekend — making US equities settle in one day rather than two.

Read More: About the ‘T+1’ Rule Making US Stocks Settle in a Day:…

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