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Asian stocks edge up, dollar holds steady

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MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.15%

Asian stocks edged up and the dollar held steady on Tuesday ahead of a key U.S. inflation report that could help shape the Fed’s rates outlook and determine the timing of interest rate cuts.

Bitcoin remained strong after surpassing $50,000 for the first time in more than two years, thanks to inflows into exchange traded funds (ETFs) backed by the digital asset. The token was last at $50,0097 in Asian hours.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.15% in early trading. The index is down 3% so far in 2024.

Japan’s Nikkei on the other hand has carried on from last year and is 12% higher for the year. On Tuesday, the index gained 1.7% to reach a new 34-year high on the back of a softer yen which is nearing the closely-watched 150 per dollar level.

China’s financial markets are shut for the Lunar New Year holiday and will resume trade on Monday, February 19, with Hong Kong markets due to resume on February 14, leaving trading in Asia subdued and taking cues from the Wall Street.

On Monday, the Nasdaq slid in the afternoon session after briefly crossing its record closing high from November 2021. The benchmark S&P 500 ended lower but remained just above the 5,000-point level it crossed on Friday. E-mini futures for the S&P 500 dropped 0.16%.

Investor attention this week will be on crucial reports on January’s U.S. CPI, due later in the day, and PPI, scheduled to be released on Friday.

A string of recent data, led by strength in the labour market, has underlined the resilience of the U.S. economy and pushed traders to scale back expectations of early rate cuts from the Fed.

Markets have all but chalked off chances of a rate cut in March, with traders pricing in a 13% probability of an easing compared with 77% a month earlier, according to the CME FedWatch tool.

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