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Asian stocks fall as Reuters relies on sharp rate cuts in the US




© Reuters. A man is pictured on an electronic board displaying a graph analyzing the recent change in the Nikkei stock index to a broker in Tokyo.

By Swati Pandey

SYDNEY (Reuters) – Asian stocks were a bleak on Monday after a strong US job wins tempered expectations The Federal Reserve will achieve a sharp cut in interest rates while the Turkish lira is worried about independence the central bank lingered near two weeks lows.

US investment bank Morgan Stanley's decision to reduce its exposure has also negatively impacted share sentiment from global equities amid concerns over the capacity for political easing to offset weaker economic data.

The gloomy sentiment spread beyond Asia as Euro-Stoxx-50 futures () fell 0.4% across the region, while futures in Germany () and London () fell 0.5% % or 0.3% reductions. E-minis for the S & P500 () fell 0.25%.

In rare cases, every Monday in Asia, every market in Asia wrote in red. MSCI's broader index for Asia-Pacific equities outside Japan () lost 1

.4%. The Japanese Nikkei () lost 1%.

Chinese equities were sold strongly, with the blue-chip index () down 2.2% and the Hang Seng index () down 1.8%.

South Korea's KOSPI () fell 2.1%, and Australian equities () dropped to around 1.2% to a five-week low.

"We are reducing our exposure to global equities to the area we consider underweight," said Andrew Sheets, a London-based strategist from Morgan Stanley in a note. The previous area was "neutral".

Expensive valuations and pressure on earnings were one of the reasons for the downgrade, according to Sheets, while the bank increased its exposure to emerging-market Japanese sovereigns and safe havens.

Since the beginning of the year, global equities have generally been driven by expectations that central banks will keep interest rates at or near record lows to boost economic growth.

These expectations were tempered by a US working report on Friday, which showed that the number of non-agricultural workers in June rose by 224,000 and has exceeded forecasts for 160,000, suggesting that the largest economy the world is still on fire.

Investors now expect US Federal Reserve Chairman Jerome Powell to slow interest rate cuts this year.

The Fed's aggressive easing betting has already ended, and the market is forecasting easing this month by 27 basis points from 33 basis points before payslips.

Powell will provide more evidence on the short-term monetary outlook this week on his semi-annual testimony before the US Congress.

"Global equities are undoubtedly expensive, but valuations have been driven by lower yields and liquidity, and that makes Fed Chairman Powell's speech so important this Thursday," said Chris Weston, strategist at Pepperstone.

"For those holding dollar positions, gold or US equities … Powell's statement is an event risk and one in which we should consider how reactions to our exposures would impact."

CURRENCIES AND GEOPOLITICS

There has been some positive news about the protracted China-US trade war with White House economist Larry Kudlow confirming that US and Chinese leaders will be meeting for trade talks next week.

"Whether negotiators can find a solution to the difficult structural problems that persist between the two. Englisch: www.socialistgroup.org/gpes/session…08&place=STR "To reach an agreement," said Rodrigo Catril, strategist at the National Australia Bank.

Foreign exchange markets traded in the Turkish lira which weakened to 5.7930 per dollar, the lowest level since June 28, after Turkish central bank governor Murat Cetinkaya, whose four-year term expires in 2020, was replaced by his deputy Murat Uysal.

President Tayyip Erdogan dismissed Cetinkaya for rejecting the government's repeated demands for interest rate cuts and relaunched the recession-hit economy as the key interest rate cuts resumed.

The (), which measures The greenback against a basket of major currencies was somewhat weaker at 97.245 after climbing to a 2-1 / 2-week high of 97.443 on Friday.

The Euro () was trading slightly lower at $ 1.1224, not far from a low of $ 1.1205 on Friday's 2-1 / 2-week low.

The Australian Dollar which has been on the uptrend since June 18, fell below 70 cents and last traded at $ 0.6985.

] Geopolitics could be in focus this week after it announced on Sunday that Iran will boost its uranium enrichment, which violates a cap on a landmark 2015 nuclear deal.

"So far, tensions between the US and Iran have had no significant impact on markets, but if tensions escalate, it could be a different story," said Catril of the NAB. [19659] 004] On commodity markets, oil prices rose by 5 cents to $ 64.28 a barrel on Brent Crude Oil Futures (), the international benchmark for oil prices, while they rose 4 cents to $ 57.55.

increased 0.3% to $ 1,403.21 per ounce.


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