Asian Stocks Talking Points:
- Asian stocks made broad gains Tuesday
- Trade hopes for the upcoming G20 meet also helped
- The US Dollar was weaker as investors began to doubt the likely scale of US rate rises ahead
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Asian stocks traded mostly higher once again on Thursday as investors parsed the latest commentary from Federal Reserve Chair Jerome Powell.
He said on Wednesday that US interest rates were closer to their neutral level, an important distinction from remarks made just a few weeks ago. Markets seem to have interpreted this as meaning that rates may not rise as far next year as they had previously thought, although it must be stressed that this is only an arguable point at this time.
Still, US stock markets enjoyed this speculation, and their Asian peers have done likewise even though the resulting US Dollar weakness is likely to weigh on local exporters if it intensifies. Hopes for some progress in the trade logjam between the US and China at this weekend’s Group of 20 Summit in Argentina are also lending markets some support.
The Nikkei 225 added 0.7%, with Shanghai up 0.2%. The Hang Seng pared its gains and was flat in the middle of its afternoon, while the ASX 200 tacked on 0.7%.
The US Dollar was weaker pretty much across the board thanks to that reassessment of Fed risks. Domestic economic data were sparse. New Zealand business confidence remained in the doldrums in November, but at least didn’t worsen much from the previous month. Australia’s private capital expenditure disappointed by falling 0.5%, when a 1% rise had been expected. However, the pace of declines did slow from the previous month.
AUD/USD has received a boost from that generally weaker US Dollar, arresting the downturn which seemed to threaten a trial of its current range base.
That said the previous significant peak remains elusive, and it may remain so as month-end concerns build.
Gold prices gained on that weaker greenback-the prospect of lower US yields tends to support non-yielding gold. Crude oil prices clawed back up from their year’s lows, although demand doubts continue to cloud the market.
Still to come on Thursday are French and Swiss Gross Domestic Product numbers, along with Germany’s official unemployment figures for October and a UK home-loan snapshot. However, all these will likely be overshadowed by the wait for US personal consumption and jobless-claim figures.
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--- Written by David Cottle, DailyFX Research
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