Risk demand hurt by uncertainty over the timing of potential interest rate cuts
US markets were little changed on Tuesday as the recent volatility has ebbed. The S&P 500 rose 0.1% to notch its fourth straight gain. The Dow Jones added 0.1%, and the Nasdaq Composite gave up 0.1%. For the week so far, the S&P 500 is up 1.2%, the Dow gains 0.5%, and the Nasdaq is up 1.1%. in individual stocks, the Walt Disney fell nearly 10% despite reporting stronger-than-expected results for its latest quarter. However, the company expects its entertainment streaming business to soften in the current quarter.
In part, investor sentiment was undermined by hawkish comments from a Fed official. In particular, Minneapolis Fed President Kashkari said that the central bank could potentially keep interest rates unchanged for the rest of the year. The statement sparked questions over the timing of potential interest rate cuts, adding to uncertainty in the financial markets.
With no cues from Wall Street, Asian shares were mixed on Wednesday. Tokyo’s Nikkei 225 lost 1.54%, with investors focusing on how authorities react to the yen’s weakness against the US dollar. Elsewhere in the region, Hong Kong’s Hang Seng index shed 0.74%, the Shanghai Composite index gave up 0.61%, Australia’s S&P/ASX 200 edged 0.14% higher, while the Kospi in South Korea rose 0.39%.
Meanwhile, European markets opened slightly higher today as investors look ahead to fresh earnings reports in the region. The Stoxx 600 index was up 0.2% in early deals, with the overall mood tepid after a sluggish session in US trading overnight due to the lack of key risk events these days. US stock index futures look flat in early pre-market deals.
In currency markets, the US dollar retains bullish bias, extending its bounce from last week’s local lows seen around 104.50. The USD index is now back above 105.50, targeting the 106.00 figure. However, the upside potential looks limited at this stage due to subdued trading activity. Still, the greenback derived some support from the mentioned hawkish comments from Kashkari.
