Most Asian stocks rose on Thursday as investors felt relieved by growing evidence that the Federal Reserve would soon begin cutting interest rates. Meanwhile, talk of an imminent policy shift in Japan boosted the yen and pulled the Nikkei index from its all-time high. Markets were generally cautious ahead of the European Central Bank meeting, and the Japanese Nikkei index fell 1.4%, after reaching a new all-time high earlier in the session. The yen increased by 0.5% to 148.61 against the dollar, its highest level in a month, as momentum increased with the Bank of Japan signaling a gradual exit from massive stimulus.
Data showed that nominal wages for Japanese workers rose by 2% in January compared to the previous year. In other news, the major union in Japan secured significant wage increases in the 2024 wage negotiations. Bank of Japan board member Junko Nakagawa expressed confidence that the necessary conditions for a gradual exit from massive stimulus had begun.
In China, there was little optimism in the markets despite better-than-expected Chinese trade figures, as major Chinese stocks fell by 0.4%, influenced by a 3.3% drop in the healthcare sector.
In the United States, Wall Street closed higher after Federal Reserve Chair Jerome Powell reiterated that the Federal Reserve still expects to cut interest rates later this year, although progress on inflation is not guaranteed. Private sector employment data for February showed a slight increase, but its correlation with the official non-farm payrolls report due on Friday is not strong. This led to keeping bets on a rate cut in June at an 84% probability. Longer-dated bond yields fell, the dollar weakened, gold prices hit a record high, oil prices jumped, and Bitcoin traded near record levels at $66,500.
Currently, investors are looking for developments in Europe. The European Central Bank is expected to keep interest rates steady at a record level of 4.0%, but any signals from policymakers supporting a rate cut in June would be reassuring for the markets. In the currency markets, the decline of the U.S. dollar helped the euro reach its highest level in six weeks at $1.0900.
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Shady Fouad is a technical analyst at LDN Company
Shady's strategic vision in the currency markets is reinforced by more than fifteen years of trading experience, which enables him to blend economic and technical analyzes with high efficiency, and find the best investment ideas for traders.
