📈 Fed's first cut since 2020: Time to buy the dip? See Tech-focused stock picksUnlock AI Picks

Morning Bid: Tiptoeing nervously along US rate path

Published 08/26/2024, 05:52 PM
Updated 08/26/2024, 05:55 PM
© Reuters. FILE PHOTO: A man is reflected on an electric stock quotation board outside a brokerage in Tokyo, Japan April 18, 2023.  REUTERS/Issei Kato/File Photo
NVDA
-
GC
-
US10YT=X
-

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets.

World markets are entering a period of nervous uncertainty as investors try to determine whether upcoming U.S. interest rate cuts will be benign and in tandem with a "soft landing," or mitigation against a more damaging economic downturn.

Asian markets leaned towards the former on Monday and traded positively. But risk appetite steadily whittled away as the day progressed, pushing Wall Street into the red and setting the tone for a more jittery session on Tuesday.

The Asia and Pacific calendar on Tuesday is light, with Japanese producer prices and trade figures from Hong Kong and Thailand the major economic indicators on tap. Australian mining giant BHP's annual results are the main corporate highlight.

Global market dynamics will therefore be the more important drivers for Asia as investors continue to digest the implications of Fed Chair Jerome Powell's policy pivot at Jackson Hole on Friday.

Fears of U.S. recession and a continued rise in unemployment are keeping a 50 basis point rate cut from the Fed next month on the table. This is putting U.S. stocks on the defensive and fueling demand for Treasuries, although bonds and the dollar were generally flat on Monday.

World stocks ended slightly lower on Monday, but not before hitting a new record high. Nvidia (NASDAQ:NVDA) shares slid ahead of the AI darling's quarterly results on Wednesday, pushing Wall Street lower but not before registering a fresh six-week high.

Gold hugged recent record peaks, while oil prices rose again on Monday as production cuts in Libya added to supply concerns stemming from reports of escalating conflict in the Middle East. Oil is now up 8% in three days.

So it is a mixed bag for Asia on Tuesday. This is the backdrop to a re-emergence of trade tensions between China and the West, as the Biden administration prepares to announce final implementation plans for steep tariff increases on certain Chinese imports.

U.S. manufacturers have asked for the higher tariff rates on a range of goods from electric vehicles to electric utility equipment to be reduced, delayed or abandoned, and for potential exclusions to be greatly expanded.

The White House had said initially the new tariffs would take effect on Aug. 1 but that was delayed. The politically-loaded decision on what form they will take will be made by the end of the week.

Canada's Prime Minister Justin Trudeau on Monday said that Canada will impose a 100% tariff on the import of Chinese electric vehicles, including Teslas, and will also impose a 25% tariff on imported steel and aluminum from China.

Here are key developments that could provide more direction to Asian markets on Monday:

- Japan services PPI (July)

© Reuters. FILE PHOTO: A man is reflected on an electric stock quotation board outside a brokerage in Tokyo, Japan April 18, 2023.  REUTERS/Issei Kato/File Photo

- Thailand and Hong Kong trade (July)

- Australia BHP annual results

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.