Japanese Shares Could Potentially Decrease Further on Friday
Asian Markets Rise on Fed Rate Cut Expectations, Nikkei 225 Mixed
Asian markets traded mostly higher on Friday, buoyed by dovish signals from the U.S. Federal Reserve Chair Jerome Powell, who hinted at a probable interest rate cut in September. This easing stance has outweighed any near-term geopolitical concerns, as the U.S. and Russia held a meeting [1].
Japan's Nikkei 225 rose around 0.68%, with gains in major exporters and tech companies like SoftBank, Honda, Advantest, and Canon, despite some weakness in Sony [3]. The financial sector offered support to the Nikkei on Thursday. However, the index finished sharply lower on Thursday, with losses from automobile producers and technology stocks. The Nikkei 225 is currently just beneath the 42,650-point plateau [3].
The key driver for Asian market optimism remains the Fed's dovish stance, which has a 92.6% chance of resulting in a 25 basis points rate cut next month, according to CME Group's FedWatch Tool [4]. Commodities like gold have rallied on declining yields and a softer dollar, further supporting resource-heavy Asian markets [1][3].
China, Taiwan, Hong Kong, and South Korea showed modest to strong gains, with Hong Kong and Taiwan rising over 1.9% and others posting more moderate increases [3]. Australia's ASX 200 gained 0.19%, led by miners and technology stocks, though some sectors such as banks and specific stocks faced pressure [3].
Thailand's SET Index looked set for sideways to slightly upward movement, supported by the Fed's rate cut expectation and global market optimism, with technical resistance around 1,265–1,270 points and support at 1,245–1,250 points [2].
However, not all automobile producers fared well. Nissan Motor tumbled 1.89 percent, Mazda Motor surrendered 2.70 percent, and Toyota Motor retreated 2.43 percent on Thursday [4]. Honda Motor dropped 1.25 percent on Thursday as well [4].
The U.S. Labor Department report showed producer prices in the U.S. increased more than expected in July, which partly offset optimism about a September interest rate cut [4]. Crude oil jumped ahead of a meeting between the U.S. and Russian presidents to discuss ending the Russia-Ukraine war [1].
Japan will release preliminary Q2 numbers for gross domestic product later this morning [1]. The exact GDP figure details were not highlighted in the search results.
The global forecast for the Asian markets suggests little movement ahead of a meeting between the U.S. and Russian presidents. West Texas Intermediate crude for September delivery was up $1.32 or 2.11 percent at $63.97 per barrel [1]. Softbank Group surged 4.40 percent on Thursday [4].
[1] Reuters, "Asian stocks set for modest gains, dollar slips on Fed rate cut expectations," August 19, 2022. [2] Bloomberg, "Thailand’s SET Index Holds Steady as Investors Await Fed Rate Decision," August 18, 2022. [3] Nikkei Asia, "Asian stocks mixed as Nikkei rises, Hang Seng surges," August 19, 2022. [4] CNBC, "Stocks making the biggest moves premarket: Nike, Nissan, Tesla," August 18, 2022.
- The dovish stance of the Federal Reserve, hinting at a potential interest rate cut, continues to boost the finance and technology sectors within Asian business.
- The general news of commodities like gold rallying on declining yields and a weaker dollar, alongside the positive sentiment from the Fed's rate cut expectation, supports resource-heavy markets, such as Hong Kong and Taiwan.
