Asian stocks gain, dollar droops as Fed chair sets stage for rate cut

Asian stocks gained and the dollar drooped on Thursday after Federal Reserve Chair Jerome Powell reinforced prospects of a U.S. interest rate cut later this month.

Asian Stocks

In an appearance before his congressional overseers on Wednesday, Powell confirmed that the U.S. economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war.

Powell said the central bank stands ready to “act as appropriate”.

  • MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%, while Japan’s Nikkei added 0.4%.
  • The Shanghai Composite Index advanced 0.8%, South Korea’s KOSPI climbed 1% and Australian stocks edged up 0.3%.
  • U.S. stocks ended higher on Wednesday and the S&P 500 briefly crossed the 3,000-point mark for the first time following Powell’s remarks.

Currency

  • The greenback was down 0.35% at 108.080 yen, forced off a six-week high of 108.990 scaled the previous day.
  • The euro nudged up 0.1% to $1.1263 after gaining 0.4% on Wednesday.
  • The Australian dollar was steady at $0.6962 following an overnight rise of 0.5% against the broadly weaker dollar. The surge helped the Aussie pull away from a 2-1/2-week trough of $0.6910.

Bonds

  • The 10-year U.S. Treasury yield was at 2.038% after dropping on Wednesday from a three-week high of 2.113% following the Fed chair’s congressional testimony.

Commodities

The contract had surged 4.5% on Wednesday after U.S. crude inventories shrank and as major producers cut nearly a third of offshore Gulf of Mexico production ahead of an expected storm.

  • In commodities, U.S. crude oil futures extended the previous day’s large gains to touch $60.67 per barrel, their highest since May 23.
  • Brent crude brushed a six-week high of $67.15 per barrel and last traded at $66.91.
  • Spot gold rose to $1,426 an ounce, its highest since July 3 as reinforced expectations for a Fed rate cut boosted the non-yielding precious metal.

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