Today’s News
The Federal Reserve’s recent interest rate cut and its commitment to further easing continue to fuel optimism in global financial markets, positioning Asian stocks for a positive start to the week.
In Japan, Nikkei futures are indicating a more than 1% rise at the open, supported by the yen’s decline last week. However, the increase in long-term U.S. Treasury yields may temper some of this optimism.
Image Source: CNN
Friday’s monetary policy decisions from Japan and China could also impact Asian markets. The Bank of Japan (BOJ) chose not to raise rates, as expected, but indicated no rush for future hikes. This contributed to the yen’s weakest close since early September, further boosting Japanese equities.
Meanwhile, the People’s Bank of China (PBOC) unexpectedly left its rates unchanged despite growing domestic economic weakness and deflationary pressures. Internationally, the Fed’s 50-basis point rate cut provided a window for China to lower its rates, but the PBOC chose not to act.
Investor sentiment toward China remains cautious, reflected in foreign direct investment figures, which fell 31.5% year-on-year for the first eight months, the steepest drop since January 2009.
Despite this, the yuan remains strong, hitting a 16-month high due to the PBOC’s reluctance to cut rates and rising expectations for forthcoming stimulus to revive growth, asset prices, and confidence.
In contrast, the yen starts the week on weaker ground after a volatile period. Last week, the yen briefly surged past 140 per dollar for the first time in over a year, only to finish the week near 144, marking a 2% drop, its worst performance since April. Japan’s top currency official, Atsushi Mimura, remarked that past yen carry trades have likely been mostly unwound but noted that Tokyo is monitoring for any resurgence that could heighten market volatility.
Speculators continue to grow bullish on the yen, with U.S. futures data showing net long positions at an eight-year high for an 11th consecutive week.
Looking ahead, Monday’s economic calendar for the Asia-Pacific region includes key data such as inflation reports from Malaysia and Singapore, as well as preliminary September purchasing managers’ index (PMI) figures from Australia and India. Additionally, New Zealand will release trade figures, and the Reserve Bank of Australia will begin its two-day policy meeting.
Other News
Citigroup’s China Expansion Delayed by U.S. Regulators
Citigroup’s plans to expand in China are delayed due to U.S. Federal Reserve penalties over data management issues, impacting its ability to meet Chinese licensing requirements.
Oil Prices Edge Up on US Rate Cut, Geopolitical Tensions
Oil prices rose slightly amid concerns over Middle East conflicts and the potential impact on supply, along with support from last week’s U.S. interest rate cut, which is expected to boost demand.
Swiss Regulator Probes Credit Suisse’s Final Months
Swiss regulator FINMA is investigating Credit Suisse’s handling of the crisis leading to its 2023 merger with UBS, probing potential mismanagement and regulatory deception.
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