Home > Dynamic > Expectations of a ra...

Expectations of a rate hike by the Bank of Japan support the continued strength of the yen, and Asian stocks are expected to follow the rise of US stocks

2024-09-13

186

Asian stocks were expected to extend Wall Street's four-day winning streak on Friday as the latest round of economic data failed to dispel investors' expectations of a rate cut by the Federal Reserve.

Equity futures in Japan, Australia and Hong Kong all rose slightly, with gains of less than 1%, showing that market risk appetite remains cautious. The yen's appreciation trend was temporarily interrupted on Thursday, boosting Japanese exporters. The dollar was quoted at around 141.56 yen.

The yield on the 10-year U.S. Treasury bond rose 2 basis points to 3.67% on Friday, while the dollar index fell. European Central Bank President Christine Lagarde said the ECB's policy will be tight enough after cutting interest rates by 25 basis points to 3.5%. German government bonds ended a seven-day winning streak. Oil prices rose and gold hit a record high.

The U.S. producer price index (PPI) in August rose slightly after a revision of the previous month's data, while the inflation measure favored by the Federal Reserve was flat. At the same time, the number of people applying for unemployment benefits rose slightly.

The data failed to change market expectations that the Federal Reserve will cut interest rates at its monetary policy meeting next week. While most expect a 25 basis point first cut, some believe it could be as high as 50 basis points, a much higher pace than usual.

“We think the Fed could still cut by 50 basis points, reducing the risk of a soft landing,” said Evercore’s Krishna Guha.

Thursday’s wholesale inflation data follows the consumer price index. The August CPI data showed an acceleration in core inflation, but policymakers were more focused on the slack in the labor market, which will take center stage in policy discussions in the coming months.

“The PPI data was broadly in line with the CPI data, and unemployment claims were in line with expectations, suggesting that conditions are ripe for the Fed to start a rate-cutting cycle,” said Chris Larkin of Morgan Stanley E*Trade. “Markets expect the Fed to cut by 25 basis points for the first time, but the discussion will quickly turn to the magnitude and pace of rate cuts going forward.”

BoJ rate hike expectations

Just over half of Bank of Japan watchers expect a December rate hike, according to a Bloomberg survey, and few expect a policy move at next week’s meeting.

In the past four weeks, five of the nine board members have said they plan to raise rates again if inflation expectations materialize. Despite the market turmoil following the July 31 rate hike, the Bank of Japan has not changed its normalization policy track.

"The probability of a rate hike at this meeting is very low, and it is too early to judge the impact of the July rate hike and market volatility," said Masamichi Adachi, chief Japan economist at UBS Securities.

Elsewhere in Asia, key data will include Japanese industrial production, Indian trade balance and Sri Lankan gross domestic product.

In addition, U.S. West Texas Intermediate crude oil prices rose more than 2% on Thursday as Storm Francine disrupted oil production in the Gulf of Mexico.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

CM Trade

As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.

[Products]

The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.

[System]

2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate

[Service]

Comprehensive market news, professional market analysis, 7*24 hours online customer service

[Advantage]

Low cost, high leverage, flexible one-stop all day two-way trading.

[Authority]

Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.

Free Access
Daily Trading Strategy Download Now

CM Trade Mobile Application

Economics Calendar

Expectations of a rate hike by the Bank of Japan support the continued strength of the yen, and Asian stocks are expected to follow the rise of US stocks

Access to global trading markets anytime and anywhere