Tom Westbrook
SINGAPORE (Reuters) – Stocks rose on Thursday, with markets from Tokyo to New York hitting record highs, while traders counted down U.S. data expected to show slowing inflation and pave the way for a September interest rate cut.
Bonds and the dollar remained steady, with the yen holding steady at $161 to the dollar, near its lowest level in decades.
Gains in heavyweight technology stocks pushed the index up 1% overnight to a sixth consecutive closing high, with Asia rising 1% to a record high of 42,426 points. ()
MSCI’s broadest index of Asia-Pacific shares outside Japan also rose 1% to hit a two-year high. Taiwan’s stock market hit a record high, and the Australian stock market was just one step away from its all-time high.
“The main driver is really the prospect of a rate cut,” said Shane Oliver, chief economist and head of investment strategy at AMP Sydney (OTC: ). “If we get good inflation data, it will meet one of Powell’s requirements.”
Federal Reserve Chairman Jerome Powell told lawmakers on Capitol Hill overnight that “more good data” would lay the foundation for the Fed to cut interest rates. Futures pricing implies about a 75% chance of a rate cut in September.
Economists predict that the U.S. consumer price index (CPI) will slow to 3.1% in June from 3.3% in May.
The Bank of Korea kept interest rates unchanged, with Governor Lee Chang-yong telling reporters that now is the time to prepare to shift to a rate cut.
The New Zealand Federal Reserve’s shift in tone on Wednesday led to a sharp repricing of interest rate cut expectations, with the benchmark two-year swap rate plunging 18 basis points and the currency depreciating.
Malaysia is expected to keep interest rates steady later in the day, and the U.S. earnings season kicks off with results from Delta Air Lines (NYSE: ) and consumer leader PepsiCo (NASDAQ: ), ahead of bank results on Friday.
China is lagging behind
Chinese stocks echoed market momentum on Thursday, but disappointing data and talk of tariffs in key export markets made gains difficult to sustain. Chinese GDP data will be released on Monday.
Hong Kong stocks rose 1%, while mainland China’s blue-chip CSI 300 index rose 0.4%, but remained close to Tuesday’s 4-1/2-month low. [.HK][.SS]
USD/USD was steady at 7.2738, just above Wednesday’s near eight-month low. [CNY/]
Elsewhere, moves were muted ahead of the release of the U.S. Consumer Price Index (CPI).
EURUSD rose to $1.0835. Sterling hit a one-month high of $1.2854 as the Bank of England’s chief economist was more vague overnight on the timing of a rate cut than many traders expected. [FRX/]
The yen was hovering at 161.58 against the dollar. Data showed that Japan’s core machinery orders unexpectedly fell for the second consecutive month, challenging expectations for a rate hike.
The New Zealand dollar found support at the 200-day moving average and was trading at $0.6095. The Australian dollar rose 0.2% to a six-month high of $0.6763. [AUD/]
Treasuries were steady overnight and in Asia, with the U.S. two-year yield at 4.62% and the benchmark 10-year yield at 4.29%. [US/]
In commodities trade, oil prices edged higher on signs of strong U.S. gasoline demand. Futures rose 35 cents, or 0.4%, to $85.43 a barrel. It rose 36 cents, or 0.5%, to $82.47 a barrel. [O/R]
Wheat futures were under pressure near 2-1/2-month lows due to favorable U.S. weather. [GRA/]
Gold prices rose 0.2% to $2,373 an ounce. After last week’s sell-off, Bitcoin has stabilized around $58,900.
