Asian stocks traded in narrow ranges on Wednesday following a recent rout that nearly wiped out the year’s gains. Currencies were once again in focus as traders prepared for higher interest rates in the US.
The dollar slightly weakened against most major peers after a five-day gain, putting pressure on global emerging-market currencies. The won rebounded after breaching a key level, while the Philippine peso weakened and Indonesia’s rupiah continued to decline despite central bank intervention.
Kieran Calder, head of equity research for Asia at Union Bancaire Privée in Singapore, noted that the market is now expecting rate cuts from the Federal Reserve starting in July or September, leading to a stronger dollar that is impacting Asian markets.
MSCI’s Asia Pacific Index saw a slight climb after earlier dropping amid concerns about higher rates and geopolitical tensions. Equity benchmarks in Japan and South Korea fell, while shares in mainland China gained as regulators addressed concerns about new stock exchange rules.
Treasury yields remained steady after reaching 2024 highs, following comments from Federal Reserve chief Jerome Powell about inflation. Market expectations for rate cuts have decreased, with traders now doubting there will be any significant reductions.
In other news, New Zealand saw home-grown price pressures in the first quarter, and oil prices edged lower as traders awaited Israel’s response to Iran’s weekend attack. Gold held near a record-high.
Key events to watch this week include Eurozone CPI data, speeches from Fed officials, and earnings reports from Taiwan Semiconductor. Major moves in markets included rises in S&P 500 futures and the Shanghai Composite, as well as fluctuations in currencies and bond yields.
Overall, the market remains cautious as it navigates through uncertainties surrounding interest rates, inflation, and geopolitical tensions.
