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Markets Update: Asian markets surged on Wednesday, driven by the Bank of Japan's surprise policy tightening and China's stimulus hopes, while the yen rebounded sharply, oil prices climbed amid Middle East tensions, and investors await the Federal Reserve's decision amid expectations for rate cuts as global economic concerns persist.
Economic Calendar
Global Markets Roundup: 31 July 2024
Asian stocks experienced significant gains on Wednesday, with notable volatility in the yen, following the Bank of Japan's (BOJ) decision to raise interest rates. This move came as investors weighed mixed earnings from tech giants Microsoft and AMD, highlighting divergent trends in the AI sector. Oil prices climbed from recent seven-week lows due to heightened tensions in the Middle East. The situation escalated following reports from the Palestinian militant group Hamas that their leader, Ismail Haniyeh, was killed in Tehran. The BOJ announced a comprehensive plan for quantitative tightening, aiming to gradually reduce monthly bond purchases to approximately 3 trillion yen ($19.6 billion) by Q1 2026. Additionally, the BOJ increased its overnight call rate target to 0.25%, up from the previous range of 0-0.1%.
Japan's Nikkei index NI225 saw a slight decline of 0.19% amidst choppy trading, while Japanese government bond yields dipped post-announcement. MSCI's broadest index of Asia-Pacific shares outside Japan rose by 0.9%, with Chinese stocks leading the charge. The blue-chip index (3399300) surged by 2%, while Hong Kong's Hang Seng HSI mirrored this rise, also up by 2%. Despite China's manufacturing activity contracting for the third consecutive month in July, the market anticipates further stimulus from Beijing to counteract the prolonged property crisis and growing job insecurity. Meanwhile, Australian stocks XJO jumped over 1%
Investors are closely monitoring central bank policies, with a Federal Reserve decision expected later in the day. While the Fed is predicted to maintain current rates, markets are speculating on potential rate cuts in September, with a 25 basis point reduction fully priced in and around 68 basis points of easing anticipated for the year.
The dollar index DXY stood at 104.41, down 1.36% for the month. The yen USDJPY exhibited erratic movements, hovering around 152.81 per dollar, yet poised for a substantial gain of over 5% in July. The currency had previously neared 38-year lows of 161.96 due to Japan's comparatively low interest rates. However, factors such as potential official intervention and shifts in carry trade dynamics helped the yen recover to a 12-week high last week. Elsewhere, the Australian dollar AUDUSD hit a three-month low following a soft inflation report, which dampened expectations of future rate hikes.
In the commodities market, Brent BRN1! increased by 1.49% to $79.80 per barrel, while U.S. crude CL1! rose by 1.65% to $75.98 per barrel. Gold XAUUSD advanced above the $2,420 level. September arabica coffee KC1! edged 0.2% higher at $2.308 per lb. October white sugar SF1! climbed 0.4% at $538.60 a metric ton.
Looking ahead today markets anticipate, French Inflation Rate, German Unemployment Rate, EU Inflation Rate, ADP Employment Change, Canadian GDP, US Pending Home Sales, EIA Crude Oil Stocks Change, FED Interest Rate Decision/Press Conference.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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