Investors will focus on Powell’s speech and the US PCE report
Asian stocks rallied to the highest in 2.5 years on Tuesday as investors cheered a solid package of Chinese stimulus measures, including an impending cut in bank reserves by 50 basis points and reducing mortgage rates to spur sluggish economic growth. Against this backdrop, MSCI’s broadest index of Asia-Pacific shares outside Japan rallied to levels last seen in April 2022. Hong Kong’s Hang Seng Index jumped 4% and the Shanghai Composite added 4.15%.
In the US, however, US stock index futures were little changed in pre-market deals on Tuesday, with bullish bias prevailing. In Monday’s regular trading, the S&P 500 rose nearly 0.3% and the Dow added 0.15%. Both indexes notched fresh record highs. The Nasdaq Composite finished the session up 0.14%.
European markets traded higher today, buoyed by China’s central bank monetary stimulus measures. The pan-European Stoxx 600 index was 0.8% higher by mid-morning. Regional equities started the week on a positive note even as German and French preliminary composite PMIs showed declines in September, as preliminary data showed.
Meanwhile, the US dollar is back under pressure after a bounce seen on Monday. The USD index came across a local resistance in the 101.25 area to get back below the 101.00 figure today. The safe-haven greenback failed to extend the recent recovery as the risk-on tone intensified across the financial markets amid China’s stimulus measures.
Later in the week, investors will focus on Powell’s speech and the US PCE report. The two events would set the tone for markets ahead of the weekend. Should the Fed Governor express a more dovish tone when commenting on last week’s decision to cut rates aggressively, the dollar may see deeper losses in the near term.
