SINGAPORE- Asian stocks got off to a positive start ahead of the Federal Reserve’s policy meeting later in the week, while oil prices ticked down on expectations that higher-for-longer US interest rates would dampen demand.
MSCI’s broadest index of Asia-Pacific shares outside Japan tacked on 1 percent , helped by Wall Street’s positive lead on Friday due to a rally in mega cap growth stocks.
The upbeat sentiment spilled over into the new week, with Nasdaq futures rising 0.36 percent and S&P 500 futures gaining 0.27 percent .
Hong Kong’s Hang Seng Index similarly advanced 1.3 percent , while China’s blue-chip index edged 1.4 percent higher.
The Fed’s two-day monetary policy meeting beginning Tuesday takes center stage for the week, where expectations are for the central bank to keep rates on hold.
Focus, however, will be on any guidance for the central bank’s rate outlook, after repeated runs of stronger-than-expected US economic data and still-sticky inflationary pressures derailed market bets on how soon the Fed could commence its rate easing cycle.
Market pricing shows a first Fed rate cut is expected in September, from a June start only a few weeks ago, with just over 30 basis points worth of easing expected this year.
“We’ve seen quite a significant repricing of rate expectations in the US and that’s kind of a benchmark for global interest rates,” said Jarrod Kerr, chief economist at Kiwibank.
“I think the Fed this week will kind of echo those comments that rate cuts aren’t as close as they had hoped.”
The prospect that US rates would remain in restrictive territory for longer have propped up the greenback, though it was broadly on the back foot on Monday.
Elsewhere, the yen jumped sharply on Monday after it slid past 160 per dollar earlier in the session, leading to speculation that Tokyo could have intervened in the currency market while the country was out for a holiday.
The yen strengthened about 2 percent from the initial 159 per dollar level in a matter of a few minutes during Asia hours, as some traders said selling of dollars was seen onshore.
