Asian stock rally pauses for breath, yen struggles against crosses

Asian shares saw a pause in their recent upward momentum on Thursday as investors awaited fresh market-moving news. Meanwhile, the yen faced significant selling pressure, particularly against the euro and Swiss franc. Oil prices retreated slightly after hitting seven-week highs due to concerns surrounding U.S. crude inventories and ongoing export issues in key oil-producing countries like Iraq, Venezuela, and Russia.

In Europe, stock futures pointed to a subdued start, with EUROSTOXX 50 futures down 0.1%. In the U.S., S&P 500 and Nasdaq futures remained flat as investors awaited updates from Federal Reserve officials on their views regarding interest rates. San Francisco Fed President Mary Daly hinted at the need for further rate cuts, although the timing remained uncertain.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1% after posting gains of over 5% for the month and 9% for the quarter. Japanese shares, represented by the Nikkei index, rose 0.2% following a strong performance of 7% for the month and 13% for the quarter.

Chinese shares outperformed, with blue-chip stocks recording a 0.7% increase and Hong Kong’s Hang Seng index advancing by 0.2%. Chinese tech shares extended their winning streak to eight weeks on the back of growing optimism around artificial intelligence.

On Wall Street, stocks closed lower for a second consecutive session as investors locked in profits from recent record highs. Market expectations for a rate cut from the Federal Reserve in October remained high, with futures implying a 92% probability. However, the expected total easing has decreased to 100 basis points from 125 basis points just a few weeks ago.

Looking ahead, U.S. economic data including the Personal Consumption Expenditures report and the final estimate for second-quarter GDP will be closely watched. Additionally, concerns about a potential government shutdown added to market uncertainties.

In currency markets, the dollar index held steady, while the yen faced pressure following the Bank of Japan’s recent policy stance. In commodities, gold prices remained flat, and oil prices edged lower. The Swiss National Bank was expected to maintain its policy rate at zero later in the day.

Overall, market participants remained cautious amid ongoing geopolitical and economic uncertainties, with a keen eye on upcoming data releases and central bank statements for further guidance on market trends.