Asian markets experienced a downturn on Tuesday as traders awaited key economic indicators from the United States, including the Federal Reserve’s policy decision and inflation data. Meanwhile, the euro continued to struggle following political developments in Europe.
In the US, the main indexes saw gains on Monday, with the S&P 500 and Nasdaq setting new records. However, Asian markets reacted less favourably on Tuesday. Key markets such as Hong Kong, Shanghai, and Sydney saw declines following an extended weekend. Other markets including Singapore, Taipei, Manila, and Jakarta also fell, while Tokyo, Seoul, Bangkok, and Mumbai managed to edge up.
The sentiment in Asia was further dampened by the Chinese authorities’ efforts to address housing stockpiles amid the ongoing challenges in the heavily indebted property sector. Additionally, a Hong Kong court ordered the liquidation of Chinese developer Dexin, adding to the woes in the sector.
The euro faced pressure amid growing political uncertainty in Europe, particularly after French President Emmanuel Macron called for a snap parliamentary election following the far-right’s strong performance in EU elections. This political shift had ripple effects in other European countries including Spain, Germany, the Netherlands, Italy, and Austria. Despite this, stock markets in Paris and Frankfurt saw gains after Monday’s declines, with London also showing an upward trend.
Oil prices dipped slightly after Monday’s rally, as traders anticipated the release of an OPEC report on demand forecasts. The oil market had recently seen a significant drop following announcements of reversing recent production cuts by OPEC and other producers.
Investors are closely watching the Federal Reserve’s upcoming policy meeting and the release of May’s consumer price index. While the Fed is expected to maintain current borrowing costs, there is significant interest in their “dot plot” forecast for future rate changes. Speculation about potential rate cuts this year has varied, with current predictions ranging from zero to three cuts.
Key market figures:
- Tokyo’s Nikkei 225 closed up 0.3% at 39,134.79.
- Hong Kong’s Hang Seng Index fell 1.0% to 18,176.34.
- Shanghai Composite dropped 0.8% to 3,028.05.
- London’s FTSE 100 rose 0.2% to 8,243.36.
- Euro fell slightly against the dollar to $1.0766.
- Euro/pound rose to 84.65 pence.
- Dollar/yen increased to 157.34 yen.
- Pound/dollar decreased to $1.2718.
- West Texas Intermediate crude down 0.1% to $77.69 per barrel.
- Brent North Sea crude down 0.1% to $81.56 per barrel.
- New York’s Dow Jones increased 0.2% to 38,868.04.
This market activity highlights the cautious approach investors are taking amid global economic uncertainties and the anticipation of significant financial data releases.
