Asian Stocks Rise as Dollar Takes a Breather, Nikkei Hits 34-Year Peak
Asian stocks experienced gains on Thursday, with Japan’s Nikkei reaching its highest level since January 1990. The MSCI’s broadest index of Asia-Pacific shares outside Japan rose by 0.7%, and Taiwan stocks surged by 2.6%. However, Hong Kong’s Hang Seng Index saw a slight decrease of 0.67%. China’s markets remained closed for the week due to the Lunar New Year holidays. On Wall Street, Lyft and Uber rallied, and Nvidia surpassed Alphabet as the third-most valuable US stock.
Japanese Yen Edges Higher as Economy Slips into Recession
The Japanese yen has seen a slight increase in value, trading near the significant level of 150 per dollar. Data revealed that Japan’s economy unexpectedly shrank for a second consecutive quarter, indicating a recession and raising uncertainties about the central bank’s plans to exit its ultra-easy policy this year. ING economists predict that market expectations for a rate hike in March/April will likely diminish, suggesting a potential delay to the third quarter of 2024.
Fed Path Postpones Rate Cut Expectations
Investors’ expectations of early and deep interest rate cuts by the Federal Reserve have been challenged by recent data showing the resilience of the US economy and labor market, along with persistent inflation. Although traders initially predicted rate cuts starting as early as March, they are now pricing in an 82% chance of a cut in June. Despite this delay, Chicago Fed President Austan Goolsbee believes the Fed’s path to its inflation target is still on track.
Treasury Yields Slip as Dollar Index Remains Near Three-Month High
Following Goolsbee’s comments, Treasury yields decreased, with the yield on 10-year Treasury notes slipping to 4.232% during Asian hours. The dollar index, which measures the US currency against six rivals, slightly eased but remained near its three-month high. Meanwhile, Bitcoin reached its highest value since December 2021, surpassing $1 trillion in total value on Wednesday.
Hot Take: Asian Stocks Surge as Dollar Pauses and Nikkei Reaches New Heights
Asian stocks have experienced significant gains, with Japan’s Nikkei reaching its highest level in over three decades. Despite Japan slipping into a recession, the yen has seen a slight increase in value. However, expectations of early rate cuts by the Federal Reserve have been postponed due to strong economic data and persistent inflation. Treasury yields have slipped while the dollar index remains near its three-month high. Additionally, Bitcoin has soared to its highest value since 2021. Overall, these developments indicate positive momentum in the Asian market and potential challenges for central banks in managing monetary policies.
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