Asian stock markets reached new highs on Friday amid optimism over potential U.S. interest rate cuts in September. The euro also saw gains ahead of French elections, hitting a three-week peak. Sterling held steady at $1.2767 amidst predictions of a Labour Party victory in Britain, ending Conservative rule after 14 years.
In Tokyo, Japan’s Nikkei and broader Topix indices both achieved record levels, mirroring similar gains in Taiwan’s benchmark index. South Korea’s KOSPI surged to a two-year peak supported by Samsung’s projected substantial rise in second-quarter profits.
Singapore’s Straits Times index, heavily weighted with banks and property sectors, advanced more than 3% over the past three days, also reaching two-year highs.
Vishnu Varathan, chief economist at Mizuho in Singapore, attributed these market movements to abundant global liquidity and record-breaking performances in the U.S. S&P 500 index. He highlighted the influence of artificial intelligence demand on chipmakers in Taiwan and South Korea, interest rate policies benefiting Singaporean banks, and a weak yen boosting Japanese equities.
Despite positive market sentiment, Japan reported a surprise decline in household spending for May, which could impact future interest rate decisions, particularly considering the yen’s influence on consumer purchasing power.
Looking ahead, focus shifts to U.S. employment data, which could influence the likelihood of future rate cuts. Recent economic indicators, including a decline in the U.S. ISM services activity index, have heightened expectations of a September rate cut, with markets pricing in potential cuts throughout the year.
In currency markets, the euro strengthened to $1.0817 ahead of French elections, while the Australian dollar reached a six-month high of $0.6738 on expectations of potential interest rate increases due to persistent inflation concerns.
Commodity markets showed gold rising 1.4% to $2,357 an ounce, benefiting from a weaker dollar, while Brent crude oil futures held above $87 a barrel on reduced U.S. crude stocks amid strong summer demand.
Bitcoin, however, faced declines, nearing a four-month low at $56,955 amidst broader market movements.
Overall, market dynamics continue to be influenced by economic data and geopolitical events, shaping expectations for future monetary policies and market performances globally.
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