SYDNEY- Japan’s Nikkei hit a record high on Tuesday, while investors elsewhere waited anxiously to see if Federal Reserve Chair Jerome Powell would sound supportive of rate cuts after evidence the US labor market is cooling.
Europe is set for a mixed open, with EUROSTOXX 50 futures off 0.2 percent and FTSE up 0.1 percent . S&P 500 futures gained 0.2 percent and Nasdaq futures firmed 0.3 percent , after Wall Street equities inched higher to close at record peaks on Monday.
The Nikkei index jumped 2.3 percent to a record high, supported by semiconductor shares, while MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.4 percent higher, just a touch below a two-year top a day earlier.
Taiwanese shares also hit a record high before running into profit-taking and were last down 0.1 percent . China’s blue-chip index rose 1.1 percent and Hong Kong’s Hang Seng index inched 0.5 percent higher.
Powell is set to appear before Congress on Tuesday and Wednesday, as investors wagered a slew of soft labor market data has greatly increased the chance of a rate cut in September to about 80 percent .
“I think markets got a degree of optimism that Powell will be cautiously dovish and that the CPI later this week will confirm that disinflation is back on track,” said Shane Oliver, chief economist at AMP in Sydney.
“Which I think seems reasonable to me. When you look at the US economy, most of the data is softening. Jobs figures on Friday were on the soft side, unemployment trending higher. Most labor market leading indicators are cooling down.”
The main economic event this week will be the US consumer price report on Thursday, where headline inflation for June is expected to slow to 3.1 percent , from 3.3 percent in May, with core inflation forecast steady at 3.4 percent .
For the remainder of 2024, markets have fully priced in a total 50 basis points of easing, equivalent to two rate cuts.
