MSCI's broadest index of Asia-Pacific stocks outside Japan rose 0.36%, on track for a monthly gain of nearly 1%, its third consecutive month of gains. The Nikkei Stock Average rose 1% as Japan resumed economic activity after the holiday on Monday.
Chinese stocks were mixed in early trading, with the blue-chip index down 0.07%, while Hong Kong's Hang Seng index rose 0.5%.
Data releases this week include European inflation and US labor market reports. FRB The government is scheduled to convene a two-day meeting on Tuesday, where it is expected to hold interest rates steady but strike a hawkish tone.
Traders remain focused on the yen after a volatile start to the week, with the Japanese currency rising from a 34-year low of 160.245 yen to 154.40 yen to the dollar on Monday, citing intervention by authorities to buy the yen. are gathering. Markets had expected Japan to intervene to support the yen after it has fallen more than 10% against the dollar this year. On Tuesday, the yen was down 0.38% in early trading at 156.92 yen to the dollar. Japan's top currency diplomat, Masato Kanda, said on Tuesday that authorities were prepared to respond „around the clock“ to currency issues, but declined to comment on whether the Ministry of Finance had intervened a day earlier to support the yen. Again he declined to comment.
„It makes no difference whether it's London, New York or Wellington (time),“ the Treasury undersecretary for international affairs told reporters.
Basu Menon, managing director of investment strategy at OCBC, said intervention alone would not change the wide gap in interest rates that is contributing to the yen's weakness.
The yen is under pressure as U.S. interest rates rise and Japanese rates remain near zero, causing cash to flow out of the yen and into higher-yielding assets.
„A lot depends on the outcome of this week's Fed policy meeting,“ Menon said.
“Markets will be waiting with bated breath to see whether the Fed becomes even more hawkish, which would support the U.S. dollar and undermine the attractiveness of the yen. If it doesn't appear to be as hawkish as the market fears, it could encourage a stronger yen.“ ”
Markets have priced in a 57% chance of a September rate cut, according to the CME FedWatch tool, with better-than-expected inflation reports forcing investors to continue lowering expectations for the timing and size of U.S. interest rate cuts this year. It's gone.
Traders are currently pricing in 35 basis points (bp) of rate cuts in 2024, significantly lower than the 150 basis points (bp) of easing that was priced in at the beginning of the year.
Changes in expectations for U.S. interest rates have pushed U.S. Treasury yields and the dollar higher, dominating currency markets. Against a basket of currencies, the dollar was little changed at 105.73. The index rose more than 1% in April and is up more than 4% for the year.
Meanwhile, earnings season heats up this week with high-profile earnings announcements from Amazon.com and Apple.
US stocks ended higher overnight as Tesla shares soared after the electric car maker made progress in winning regulatory approval to launch an advanced driver assistance program in China.
On the day, US crude oil fell 0.18% to $82.48 per barrel, and Brent crude oil fell 0.1% to $88.31. (or)