Asia Markets Track Wall St Records As Powell Revives Rate Hopes

On Wednesday, Asian stocks experienced a rise following optimistic remarks from Federal Reserve Chair Jerome Powell about a potential interest rate cut. Powell spoke at a forum in Portugal, stating that the Fed had made “quite a bit of progress” in lowering inflation and that the labor market has remained strong. He also highlighted work done to soften the labor market, a key target for decision-makers.

Powell’s comments provided fresh hope that the Fed might reduce interest rates and possibly do so twice before the end of the year. Futures traders agree, with a 70 percent chance of a rate cut by mid-September and a higher likelihood of two cuts by the end of the year according to CME Group data. These expectations led to a boost in Wall Street, with the S&P 500 closing above 5,500 points and the Nasdaq reaching a record high.

However, the euro failed to maintain its recent gains against the dollar due to concerns about potential political changes in France. The far-right National Rally (RN) of Marine Le Pen may win the second round this weekend, potentially causing a rift with Brussels and leading to uncertainly within the European Union. If centrist and left-wing parties cooperate to prevent the RN from winning an absolute majority, they may advocate for more aggressive fiscal spending policies and tax cuts, which could widen France’s already excessive budget deficit.

Among the Asian markets, Tokyo, Hong Kong, Sydney, Seoul, Singapore, Taipei, Manila, and Jakarta all saw gains, although Shanghai experienced a slight decline. Major currency pairs and oil prices also had significant movements during this time, with the euro/dollar pair decreasing, the pound/dollar pair remaining relatively stable, the dollar/yen pair rising, and both West Texas Intermediate and Brent North Sea Crude oil prices increasing by 0.4 percent.

In New York, the Dow Jones Industrial Average also saw a gain, while the London FTSE 100 index declined.

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