Title: Asian Shares Rally Amid Expectations of Rate Cuts in the US and Europe
Asian shares have rallied for a fourth consecutive session as investors anticipate rate cuts in the United States and Europe. The surge in Asian markets comes on the back of a recovery in bond markets following recent economic reports.
Investors were encouraged by the US payrolls report, which suggested a cooling labor market and increased the likelihood of an early easing by the Federal Reserve. Furthermore, productivity numbers fueled expectations of rate cuts.
Futures markets have indicated a 90% chance that the Federal Reserve will cease raising rates, with an 86% likelihood of the first policy easing occurring in June. Similarly, the European Central Bank and the Bank of England are also anticipated to cut rates.
The dovish outlook will be further reinforced by central bank speakers, including Fed Chair Jerome Powell. Scheduled to address the market this week, their remarks are expected to support the case for rate cuts.
In Australia, the central bank is likely to resume raising rates due to high inflationary pressures. However, the Bank of Japan remains on track to tighten monetary policy, albeit at a slower pace.
The MSCI’s broadest index of Asia-Pacific shares, excluding Japan, has witnessed gains on hopes of lower borrowing costs. Japan’s Nikkei and South Korea’s market have both seen substantial increases, rising by 2.4% and 4.3%, respectively. Additionally, Chinese blue-chip shares have gained 1.3% due to the positive market sentiment.
While the two-year Treasury yields experienced a pause, the 10-year notes have fallen from their peak in October. The US dollar hovers near a six-week low, while the euro remains firm.
In the commodity market, gold prices have remained strong, while oil prices have edged higher. Reassurances of additional voluntary oil output cuts have contributed to the positive sentiment.
In other news, Israel has rejected calls for a ceasefire in Gaza, escalating operations against Hamas.
Overall, the positive market sentiment driven by expectations of rate cuts in major economies has propelled Asian shares to rally for a fourth consecutive session. Investors remain optimistic about the potential for lower borrowing costs, as central banks and market experts offer a dovish outlook.