Asian shares were trading mixed on Monday as investors eagerly awaited further indications from the Federal Reserve regarding potential interest rate cuts. Japan’s Nikkei 225 saw a 0.7% decline to 40,619.40, following recent record highs. Meanwhile, Hong Kong’s Hang Seng climbed 0.5% to 16,584.22, and the Shanghai Composite gained 0.4% to 3,061.36.
The Chinese yuan fell to a four-month low of 7.2282 against the U.S. dollar, while Australia’s S&P/ASX 200 rose 0.6% to 7,813.70. South Korea’s Kospi, however, experienced a 0.5% loss, dropping to 2,735.46.
A top Japanese finance official expressed concerns about the recent surge in the U.S. dollar against the Japanese yen, sparking speculation about potential market intervention. The Bank of Japan raised a key interest rate for the first time in 17 years, bringing it slightly above zero from negative rates. Despite this, borrowing rates in Japan remain lower than those in the U.S. and other countries.
“The recent Bank of Japan meeting added another layer of complexity to the dollar’s trajectory. Despite the BOJ’s decision to hike rates, cautious communication failed to stimulate demand for the Japanese yen,” said currency analyst Luca Santos.
In the U.S., the S&P 500 slipped 0.1% from an all-time high, closing at 5,234.18 on Friday. The Dow Jones Industrial Average fell 0.8% to 39,475.90, while the Nasdaq composite rose 0.2% to 16,428.82, setting a new record.
U.S. Treasury yields pulled back, with the 10-year Treasury yield falling to 4.21% from 4.27% late Thursday. The Federal Reserve has hinted at the possibility of three interest rate cuts this year, contingent on inflation remaining subdued. Energy trading saw benchmark U.S. crude adding 52 cents to $81.15 a barrel, while Brent crude rose 52 cents to $85.35 a barrel. Investors are closely monitoring these developments as they await further guidance from the Federal Reserve.
