Asian Share Market Sentiment and Economic Outlook
SYDNEY, Aug 12 (Reuters) – Asian share markets showed broad gains on Monday, buoyed by the absence of Japanese trading due to a national holiday and a cautiously optimistic outlook for the U.S. economy. Investors are closely monitoring upcoming economic data from both the U.S. and China to gain insights into global growth prospects. The key focus for the Federal Reserve will be U.S. consumer price data scheduled for release on Wednesday.
Economists anticipate a 0.2% increase in both the headline and core consumer price indices, with the annual core rate expected to slow slightly to 3.2%. Analysts at Barclays suggest that if these predictions hold true, it could reinforce the Fed’s belief in ongoing disinflation, potentially paving the way for a rate cut in September. However, they also caution that a core inflation rate still above target might limit the extent of any rate cuts.
Regional and Global Economic Indicators
In addition to the consumer price index, several other economic indicators are on the horizon, including July retail sales, industrial output, housing starts, and various regional manufacturing and consumer sentiment surveys. The futures Asian share market currently reflects a 49% probability of the Fed implementing a 50 basis point rate cut in September, a decrease from the previous week’s 100% expectation following a sharp drop in Japanese equities. Nikkei futures were trading at 35,570, showing some recovery from last week’s decline but still not fully rebounding to prior levels. Meanwhile, MSCI’s Asia-Pacific index outside Japan rose by 0.3%, driven by a 1.5% increase in Taiwan stocks, while Chinese blue chips remained steady.
Currency and Commodity Markets
In currency markets, the dollar strengthened by 0.3% to 147.08 yen, moving away from last week’s low of 141.68. The euro remained stable at $1.0919. According to BofA FX strategist Shusuke Yamada, the rush to unwind yen carry trades—where investors borrow at low rates to invest in higher-yielding assets—has largely subsided. Yamada forecasts further yen weakness driven by structural outflows and retail investment in international equities, predicting the dollar could reach 155 yen by year-end.
Commodity markets saw gold hold steady at $2,424 an ounce after a slight dip last week. Oil prices also edged up, with Brent crude gaining 22 cents to $79.88 per barrel and U.S. crude rising 38 cents to $77.22 per barrel. This increase follows a 3.5% rise the previous week, driven by concerns over potential disruptions in Middle East oil supplies. Tensions have escalated following reports of Iran’s military preparations and the Pentagon’s decision to deploy a nuclear-powered guided missile submarine to the region.
Overall, Asian share markets are reflecting a positive shift in investor sentiment, fueled by hopes for benign inflation data from the U.S. and a focus on key upcoming economic reports.
