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Asian stocks hit 27-month highs on rate cut bets

stocks lower

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.9% to hit its highest level since April 2022

Asia stocks reached 27-month highs on Thursday as weaker U.S. data narrowed the odds on a September rate cut there, lifting bonds and commodities while dragging on the dollar.

A holiday in the US made for thin trading, as investors waited to see just how large a majority the Labour Party might get in the UK election.

Markets are well prepared for a change given opinion polls have for months put the centre-left party on course for a landslide victory over the Conservatives.

The Labour party has relatively modest tax and spending plans, with the overall goal of reducing the UK’s large budget deficit, according to CBA analysts.

The Labour government’s policies will also move the UK back towards closer alignment to the European Union, they added.

In mainland Europe, polls indicated the National Rally (RN) would not win a majority of seats in Sunday’s French election as other parties moved to block the far right.

FTSE futures edged up 0.1%, while sterling held at $1.2740. EUROSTOXX 50 futures were flat.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.9% to hit its highest level since April 2022.

Japan’s Nikkei jumped 0.9% to reach near its March high, while the broader Topix reached all-time highs.

Taiwan’s main index also hit a record led by the tech sector and Taiwan Semiconductor Manufacturing Co which reached T$1,000 for the first time.

S&P 500 futures and Nasdaq futures were stable after reaching another record overnight in the wake of weak economic data.

The U.S. ISM measure of services activity surprised by slipping to its lowest level since mid-2020, with employment notably weak ahead of the June payrolls report due on Friday.

Analysts cautioned the series was contradicted by strength in the PMI survey of services, but did note that price measures in both surveys pointed to easing inflation.

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