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Market Overview
As Fears of Aggressive Rate Cuts Fade, Asia stocks Fall
Federal Reserve (Fed)
Chairman Jerome Powell has been hinting that interest rates will be cut in July
due to economic risks and inflation pressures. Wall Street Journal commented on
this at the end of last week by saying that the Fed is likely to cut rates by
25 bps this month and ‘may make further cuts in the future given global growth
and trade uncertainties.
As worries for an
aggressive rate cut have now become more settled, the Asian market reacted with
a fall in Asia stock this morning, while crude oil prices rose due to increased
tensions in the Middle East after Iran’s seizure of a British tanker.
According to Reuters,
MSCI’s broadest index of
Asia-Pacific shares outside Japan.MIAPJ0000PUS was down 0.4 percent, Japan's
Nikkei.N225 closed at 0.2 percent, the Shanghai Composite Index.SSEC was down
by one percent and Hong Kong’s Hang Seng.HSI dropped by 0.9 percent.
Speaking
about the week ahead, senior forex strategist at IG Securities said that stocks
could go lower depend on any tweets that President Donald Trump creates about
trade issues with China. “Stocks could decline if he continues to make
challenging trade comments directed at China this week,” Ishikawa said.
While Asia stock fell, crude oil prices increased with Brent crude futures LCOc1 up by 1.55 percent at $63.44 per barrel, following an increase of about 0.9 percent on Friday.
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