Asian Stocks Pause as Yen Weakens and Oil Slips
Asian shares paused their recent rally on Thursday as investors looked for new market drivers. The Japanese yen faced heavy selling pressure, particularly against the euro and the Swiss franc.
Oil Prices Retreat After Strong Gains
Oil prices slipped after rising more than 2% overnight to reach seven-week highs. The jump had been driven by a surprise drop in U.S. crude inventories and supply concerns linked to Iraq, Venezuela, and Russia.
European and U.S. Markets Stay Cautious
European stocks are expected to open subdued, with EUROSTOXX 50 futures down 0.1%. U.S. markets also traded flat, with S&P 500 and Nasdaq futures showing little movement. Investors are closely watching upcoming comments from Federal Reserve officials for fresh guidance on interest rates.
San Francisco Fed President Mary Daly said more rate cuts may be needed, but their timing remains uncertain. Earlier this week, Fed Chair Jerome Powell struck a cautious tone, signaling that further easing would be gradual.
Asian Market Performance
The MSCI Asia-Pacific index outside Japan slipped 0.1%, even after posting gains of 5% this month and 9% this quarter. Japan’s Nikkei rose 0.2% and remains up 7% for the month and 13% for the quarter.
Chinese shares outperformed, with blue chips rising 0.7% and Hong Kong’s Hang Seng adding 0.2%. Chinese tech stocks extended their rally for the eighth consecutive week, boosted by optimism in artificial intelligence.
U.S. Data and Bond Market in Focus
Wall Street closed lower for a second straight session as investors took profits from record highs. Futures still price in a 92% chance of a Fed rate cut in October, though total expected easing has been revised down to 100 basis points.
Investors are now focused on key U.S. data releases: the second-quarter GDP estimate on Thursday and the PCE price index on Friday. A potential U.S. government shutdown also looms over the markets.
Treasury yields were steady, with the 10-year note at 4.14% after a recent rise. The Treasury Department is set to auction $44 billion in seven-year notes, following earlier auctions of two- and five-year bonds this week.
Yen Pressure and Currency Market Moves
The U.S. dollar index held firm at 97.82 after gaining 0.6% overnight. That strength left yen bulls under pressure, with traders caught off guard after betting on a stronger yen following the Bank of Japan’s recent policy stance.
The Swiss franc hit an all-time high against the yen, while the euro hovered near a one-year peak at 174.66, close to its record top of 175.90. The Swiss National Bank is widely expected to hold rates at zero later today.
Commodities Trade Mixed
Spot gold was flat at $3,739 an ounce after slipping 0.7% overnight due to the stronger dollar. In oil markets, U.S. crude fell 0.4% to $64.73 a barrel, while Brent crude dipped 0.3% to $69.11.
