The recent tech-driven rally on Wall Street has had a positive impact on Asian shares, leading to a bounce in the markets. Investors are optimistic following a surge in tech stocks and are closely monitoring the upcoming policy decisions from central banks around the world.
The dollar has strengthened in response to U.S. core inflation data, which surprised slightly on the upside. This has led to a shift in expectations regarding a potential rate cut by the Federal Reserve in the near future. The market sentiment now indicates a reduced likelihood of a large rate cut next week.
European Central Bank Policy Decision
With the European Central Bank’s policy decision pending, there is anticipation of a rate cut, although the possibility of multiple rate cuts in the coming months remains uncertain. European markets are expected to see solid gains in light of the impending ECB risk event.
Global Market Movement
MSCI’s broadest index of Asia-Pacific shares outside Japan has rallied, with the Nikkei in Japan experiencing a significant jump. However, China’s share markets have remained subdued while Hong Kong’s Hang Seng has seen a modest increase.
In the foreign exchange market, the dollar has maintained a strong position against the euro, while U.S. Treasuries have experienced a sell-off. Short-dated U.S. Treasuries saw an increase in yields, with the 2-10-year yield curve flattening slightly.
Oil prices have extended gains due to fears of production disruptions caused by Hurricane Francine. Brent crude futures rose, finding support after reaching a three-year low. Meanwhile, gold prices have also slightly increased, hovering close to their record high.
The recent tech-driven rally on global markets has had a significant impact on investor sentiment and market movements. While some markets have experienced rebounds and gains, others have remained subdued. The upcoming policy decisions from central banks and geopolitical events will continue to shape the future trajectory of financial markets. Investors are advised to stay informed and exercise caution in light of the evolving economic landscape.