Asian markets saw a period of calm on Thursday after a strong rally in recent weeks, as investors opted to wait for fresh catalysts. Meanwhile, the Japanese yen came under notable selling pressure, particularly against the euro and Swiss franc. The MSCI index in Japan slipped by around 0.1% after gaining more than 5% this month and 9% this quarter, while the Nikkei rose 0.2%, extending solid gains of 7% for the month and 13% for the quarter.
In contrast, European futures pointed to a soft open, with EUROSTOXX 50 futures down about 0.1%. U.S. futures for both the S&P 500 and Nasdaq were steady with no clear direction ahead of comments from several Federal Reserve officials.
San Francisco Fed President Mary Daly stated that additional rate cuts are likely, but the timing remains uncertain. Her stance followed cautious remarks by Fed Chair Jerome Powell earlier in the week after the central bank delivered its first rate cut of the year. Futures are still pricing in a 92% chance of another cut in October, though expectations for total easing this year have been trimmed from 125 basis points to 100 basis points.
Oil prices gave back part of their recent gains after surging more than 2% in the previous session to their highest since August, supported by a sharp drop in U.S. inventories and concerns over supply from Iraq, Venezuela, and Russia. West Texas Intermediate fell 0.4% to $64.73, while Brent slipped 0.3% to $69.11. Spot gold was steady at $3,739 per ounce after dropping 0.7% under pressure from a stronger dollar.
The U.S. Dollar Index held onto gains at 97.82 after a 0.6% rise, weighing on the yen and pushing it lower against most major currencies. The euro stood at 174.66 versus the yen, near its highest in over a year, while the Swiss franc hit a record high against the Japanese currency.
In the U.S. bond market, the 10-year Treasury yield was steady at 4.14% after sharp swings caused by heavy issuance of both government and corporate bonds. The Treasury Department is preparing to auction $44 billion in seven-year notes following successful sales of two- and five-year notes earlier in the week.
Conclusion: Global markets are in a cautious holding pattern, with few short-term catalysts. Traders remain focused on upcoming U.S. economic data, particularly the Fed’s preferred inflation gauge (PCE) and the final Q2 GDP estimate, both seen as key drivers for the Federal Reserve’s policy outlook in the coming months.
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