Most Asian stock markets rose on Monday after U.S. Federal Reserve Chairman Jerome Powell suggested that it might be time to start cutting interest rates, possibly as soon as next month. This news gave investors a boost, helping to ease the recent market turmoil in August. However, analysts cautioned that unexpected data could still disrupt the optimism.
Powell’s comments also pushed the main indexes in New York up by more than one percent. Following this, markets in Hong Kong, Mumbai, Shanghai, Sydney, Singapore, Taipei, Bangkok, and Wellington all saw gains. However, Tokyo and Seoul experienced losses. European markets were mixed, with Paris and Frankfurt opening slightly lower, while London was closed for a holiday.
Investors were also keeping an eye on the Middle East after a recent escalation in tensions between Israel and Hezbollah, which has raised fears of a broader conflict in the region.
In his speech at the Jackson Hole symposium, Powell emphasized the need to adjust monetary policy, noting that future rate cuts would depend on upcoming data and the balance of risks. He expressed confidence that inflation is moving toward the central bank’s 2% target.
Markets had already been expecting the Fed to start cutting rates next month, with some speculating that there could be a total reduction of around one percentage point by the end of the year. The absence of cautious language in Powell’s remarks further fueled market optimism.
However, independent analyst Stephen Innes warned that the market’s future moves will depend on whether upcoming U.S. data shows a gradual slowdown or hints at a possible recession.
Attention now shifts to the release of key U.S. economic data, including jobs, inflation, and personal income figures.
Tokyo stocks were affected by a stronger yen, which rose following Powell’s comments and signals from the Bank of Japan that it might hike rates again if conditions allow.
Meanwhile, oil prices rose as tensions in the Middle East increased after Israel launched airstrikes in Lebanon, targeting Hezbollah positions. Despite the rise in oil prices, hopes remain that the conflict won’t escalate into a larger war involving other regional powers.
*Key Figures:*
– Tokyo’s Nikkei 225: Down 0.7% at 38,110.22 (close)
– Hong Kong’s Hang Seng Index: Up 1.1% at 17,800.86
– Shanghai Composite: Flat at 2,855.52 (close)
– London FTSE 100: Closed for a holiday
– Dollar/yen: Down at 143.76 yen from 144.34 yen on Friday
– Euro/dollar: Down at $1.1186 from $1.1193
– Pound/dollar: Down at $1.3206 from $1.3209
– Euro/pound: Up at 84.67 pence from 84.70 pence
– West Texas Intermediate: Up 0.8% at $75.46 per barrel
By Ebubedike Ochu
