Asian stocks have performed well in this morning’s session, led by a rally in Hong Kong tech shares. Futures in European and US equities also rose, and the yen extended its gain against the dollar (USD/JPY currently at 145.776) as hopes of lower interest rates in the US drive Asian currencies to their highest levels in five months. All of this activity suggests waning concern about a US recession (Goldman Sachs updated the probability of a US recession from 25% to 20% over the weekend), but investors will be waiting to hear what Jerome Powell has to say at Jackson Hole on Friday. Ueda of the Bank of Japan is also scheduled to discuss his July 31st interest rate hike in parliament this week. Large investors such as Vanguard are betting on more Japanese rate hikes, despite a decline in market pricing for additional tightening this year.
Oil declined further as traders tracked US-led efforts to secure a cease-fire in the Middle East. Gold sits on the precipice of an all-time high (currently at $2,502/oz) on hopes that the Fed is edging closer to cutting rates. Iron ore had its worst week since early June on concerns that a steel-industry crisis across China will dry up demand.
Not too much data today but tomorrow we have:
- China loan prime rates and Canada and euro area CPI tomorrow
- Sweden and Turkey interest rate decisions
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