Asian Markets Rise as Global Stocks Near Record Highs
Asian stocks mostly advanced, mirroring Wall Street's upward trend. China maintained lending rates, while Australia's central bank emphasized inflation control. Markets await Fed Chair Powell's speech at Jackson Hole.
On Tuesday, August 20, 2024, Asian stock markets predominantly showed positive performance, echoing the upward trajectory of Wall Street as it approached record highs following a tumultuous summer period.
In Tokyo, the Nikkei 225, Japan's leading stock market index, closed 1.8% higher at 38,062.92, rebounding from a 1.8% decline the previous day. The yen briefly neared 145 against the U.S. dollar on Monday before settling at 146.94 on Tuesday.
China's central bank decided to maintain its benchmark lending rates, with the one-year loan prime rate (LPR) remaining at 3.35% and the five-year LPR at 3.85%. This decision follows a series of key interest rate reductions implemented last month to bolster the economy. The LPR serves as a reference for corporate loans and mortgages in China.
Hong Kong's Hang Seng index experienced a 0.5% decrease, closing at 17,490.43, while the Shanghai Composite fell 1.0% to 2,864.91.
In Australia, the S&P/ASX 200 advanced 0.2% to 7,997.70. The Reserve Bank of Australia (RBA), the country's central bank, released minutes from its August meeting, revealing the board's decision to maintain the cash rate target at 4.35%. The RBA emphasized that controlling inflation remains its primary objective.
"It was unlikely that the cash rate target would be reduced in the short term, and it was not possible to either rule in or rule out future changes in the cash rate target."
South Korea's Kospi index rose 0.8% to 2,696.35.
In the United States, the S&P 500, which tracks the performance of 500 large companies listed on U.S. stock exchanges, rallied 1% to 5,608.25, marking its eighth consecutive gain. This streak matches its longest winning run since November 2023. The index is now within 1% of its all-time high after experiencing a nearly 10% decline earlier this month.
The Dow Jones Industrial Average, comprising 30 prominent companies, gained 0.6% to 40,896.53, while the NASDAQ Composite, representing stocks listed on the NASDAQ exchange, jumped 1.4% to 17,876.77.
Market attention is now focused on Federal Reserve Chair Jerome Powell's upcoming speech at the annual economic symposium in Jackson Hole, Wyoming. While expectations for major policy announcements are tempered, investors are keen to glean insights into potential interest rate cuts.
The Federal Reserve, the U.S. central bank, began aggressively raising interest rates in early 2022 to combat inflation, which peaked above 9% two summers ago. With inflation now showing signs of moderation, Fed officials have hinted at potential rate cuts.
Recent economic indicators, including reports on inflation and retail sales, have surpassed expectations, bolstering market optimism. However, concerns persist about the potential overvaluation of technology stocks, particularly those associated with artificial intelligence, such as Nvidia.
In the commodities market, benchmark U.S. crude oil traded at $73.23 per barrel, while Brent crude, the international standard, was priced at $77.19 per barrel. The euro was valued at $1.1080.
As global markets continue to navigate economic uncertainties, investors remain vigilant, balancing optimism with caution in anticipation of further developments in monetary policy and economic indicators.
