Asia stocks: Japan, S. Korea hit record highs.
Most Asian stock markets extended their rally on Tuesday, with shares in Japan and South Korea hitting fresh record highs, buoyed by a potential U.S. interest rate cut this week.
Bucking the regional trend, Chinese equities fell from decade highs amid caution over U.S.-China talks over chip exports in Madrid.
Regional gains followed record finishes for the S&P 500 and Nasdaq overnight. U.S. stock index futures traded largely unchanged in early Asia hours on Tuesday.
Japan’s Nikkei, S. Korea’s KOSPI hit fresh record peaks
The Nikkei 225 rose as much as 0.6% to a new record high of 45,055.38 points, lifted by technology and industrial stocks. The benchmark index jumped 4% last week.
Japan’s broader TOPIX index also gained 0.5% to reach a fresh record level of 3,177.20 points.
South Korea’s KOSPI surged 1.3% to 3,452.50 points, also a new peak, as heavyweight chipmakers Samsung Electronics and SK Hynix advanced sharply.
Dollar wobbles.
The dollar sank to a 2-1/2-month low against the euro and a 10-month trough versus the risk-sensitive Aussie on Tuesday as investors cemented bets for a Federal Reserve interest rate cut this week and more to follow.
The greenback eased to a more than two-month low on the British pound with U.S. President Donald Trump renewing calls for aggressive monetary easing.
Markets see a rate reduction of at least 25 basis points on Wednesday as a certainty, with a small chance of a super-sized 50 basis-point cut. A total of 67 basis points of reductions are seen over the rest of this year, rising to 81 basis points by end-January.
The U.S. dollar index, which tracks the currency against a basket of six major rivals, fell to 97.161, its lowest since July 24.
Rapidly softening labour market data has been the key driver of the ramp-up in easing bets in recent weeks, resulting in a lower dollar and bond yields while pushing up equity prices, with Wall Street setting new records on Monday.
Bitcoin price today down to $115.5k.
Bitcoin fell slightly on Tuesday, cutting short a recovery over the past week amid growing caution over the U.S. Federal Reserve’s decision on interest rates this week.
While optimism over a 25 basis point cut had driven some gains in Bitcoin, traders remained on edge over just what the Fed will signal with regards to its future rate decisions.
Growing doubts over the long-term viability of corporate treasuries also weighed, with buying action by top holder Strategy (MicroStrategy (NASDAQ:MSTR)) doing little to drive up prices.
Bitcoin fell 0.7% to $115,772.1 by 01:17 ET (05:17 GMT).
Fed rate cut awaited, outlook in focus
Focus this week is squarely on the Fed’s September 16-17 meeting, where markets almost unanimously expect the central bank to cut interest rates by 25 basis points.
But the central bank’s outlook on rate cuts remains uncertain, given that it has remained largely non-committal towards any future easing plans. Sticky inflation, stemming from higher U.S. trade tariffs, has been the Fed’s biggest point of contention.
Still, bets on lower rates drove outsized gains in broader risk-driven markets, especially equities. Wall Street indexes soared to record highs in recent sessions.
But crypto has been less upbeat, with its speculative nature keeping traders at bay at least until there is more clarity on the path of U.S. interest rates.
Still, lower rates tend to benefit speculative assets such as crypto, given that they usually free up more market liquidity.
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