Asian stocks rise on tech rally, markets weigh on path of US rates By Reuters

©Reuters. Men walk past an electrical panel showing the Nikkei stock average outside a broker in Tokyo, Japan, June 14, 2023. REUTERS/Kim Kyung-Hoon/File Photo

By Ankur Banerjee

SINGAPORE (Reuters) – Asian shares rose on Thursday, supported by chip stocks, with the Nikkei surging past a new 34-year high, while the dollar took a breather near a three-month high as markets assess when it is likely for the Federal Reserve to start investing. its loosening cycle.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7%, with the IT index rising nearly 3%. Taiwanese shares rose to a record high, with chipmaker TSMC rising nearly 8%.

it closed 1.2% higher, rising to 38,188.74 during the session, its strongest level since January 1990, and inching ever closer to its record high last seen in December 1989.

European stock markets look set to open strongly, with Eurostoxx 50 futures up by 0.40%, German ones up by 0.29% and 0.35%.

Investor expectations of early, deep interest rate cuts by the Fed have been undermined by a raft of data that has underlined the resilience of the US economy and job market, with this week’s data showing a persistent inflation.

Data on Tuesday showed consumer prices rose more than expected as rental costs rose.

Traders are now pricing in an 82% chance of a cut in June, CME tool FedWatch showed, further moving the starting point of the U.S. central bank’s easing cycle. At the end of 2023, markets had priced in rate cuts starting as early as March.

Investors now expect cuts of 97 basis points over the course of the year, closer to the 75 bps the Fed forecast in December.

Central bankers around the world will be a little less inclined to cut rates if the Fed delays its move, said Ben Bennett, APAC investment strategist at Legal And General Investment Management.

“But it’s just one inflation number, and we all know how difficult it is to predict, so the impact on the market is probably relatively small, unless we get a second consecutive high number.”

Chicago Fed President Austan Goolsbee said Wednesday that the Fed’s path to its 2% inflation target rate would still be on track, even if price increases are a bit stronger than expected in the coming months .

The central bank should be careful not to wait too long before cutting interest rates, Goolsbee said

That sent Treasury yields lower, with the yield falling 3.1 basis points to 4.236% in Asian hours. [US/]

Investor attention during European hours will be focused on a raft of data, with UK GDP and trade data in the spotlight on the back of UK inflation holding unexpectedly steady in January, defying forecasts of a rise .

Traders are pricing in cuts of 70 basis points from the Bank of England this year, with the first cut expected in June.


Data on Thursday showed Japan’s economy slipped into recession as it unexpectedly shrank for the second straight quarter due to weak domestic demand, raising doubts over the central bank’s plans to exit its ultra-expansionary policy this month. year.

The yen strengthened but traded near the psychologically important level of 150 per dollar. The yen was last at 150.18 per dollar.

The pair’s 150 level has in the past been seen as a potential catalyst for intervention by Japanese monetary authorities. This level was just breached which led them to intervene to support the yen at the end of 2022.

Wall Street closed sharply higher on Wednesday as a ride-hailing platform Lyft (NASDAQ:) and Uber (NYSE:) rallied, while Nvidia (NASDAQ:) took over from Alphabet (NASDAQ:) to become the third most valuable company on the US stock market. [.N]

The, which measures the U.S. currency against six rivals, was at 104.66 near its three-month high of 104.97. [FRX/]

fell 0.5% to $76.26 a barrel and settled at $81.24, down 0.44% on the day. [O/R]

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