Asia Shares Set for Weekly Gain as Risk Sentiment Improves
By Rae Wee
As the week comes to a close, Asia shares are on track for a weekly gain, with Japan's Nikkei index poised for its best week in over four years. The positive risk sentiment that originated from Wall Street has helped boost market confidence, leading to steady performance in the dollar and U.S. Treasury yields.
After last week's market turmoil, calmer conditions have prevailed this week. U.S. economic data has alleviated recession concerns and tempered expectations for aggressive rate cuts. According to Jonas Goltermann, deputy chief markets economist at Capital Economics, the market reaction to weak August data was exaggerated, with signs pointing to a more stable economic landscape.
MSCI's broadest index of Asia-Pacific shares outside Japan has seen a 0.34% increase in early trade, set to rise 1.3% for the week. U.S. futures have also shown gains following a strong cash session on Wall Street.
The positive risk mood has been reinforced by strong U.S. retail sales data and low weekly jobless claims. This has reaffirmed expectations for imminent Fed rate cuts, albeit at a measured pace. The markets are now pricing in a 25% chance of a 50-basis-point cut next month, down from 55% a week ago.
Despite the positive outlook, there are still uncertainties in the market. The Swiss franc and euro are struggling against a stronger dollar, while oil prices have dipped slightly despite a weekly gain. Gold prices, on the other hand, have seen a slight increase.
Overall, the financial markets are showing signs of stability and growth, with the potential for further gains in the near future. It is important for investors to stay informed and monitor market trends to make well-informed decisions for their finances.