Asian stocks ended higher on Wednesday, following the rally seen on Wall Street as investors continued to celebrate the optimism that the US Fed will start cutting interest rates as early as March 2024. While traders and experts continue to eye critical economic data releases which are expected to be released between now and the end of this month, the overall market momentum is being dominated by the expectations that major central banks might start to ease interest rates in 2024. Investors have strong reasons to believe that the US Fed will take the lead.
Coming to the Asian stock market news, these expectations have resulted in significant risk taking which supported the rally in global equities. MSCI’s broadest index of APAC shares outside Japan was last increased by ~0.6%. Index was all set to see a ~2.3% gain in December and was on track to close the year ~2.5% higher, after having seen a 20% fall in 2022- which was its worst performance since the year 2008.
Japan’s Nikkei saw an increase of ~1.2%, with Hong Kong’s Hang Seng Index increasing by ~0.9% in the first trading day after it was closed on account of Christmas and Boxing Day holidays. As per CME FedWatch tool, stock market has been factoring in over ~80% chance that the US Fed will start cutting rates during March 2024.
One of the significant developments of 2023 was when the US Federal Reserve posted a surprisingly dovish signal in its December meeting. This was the big deal. Globally, the investors were worrying that, in 2023, the impact of tight monetary policy might drag the global economy in recession. Happily, that didn’t take place and the more dovish US Fed will exhibit that the likelihood of recession in 2024 has decreased significantly.
Moving away from the Asian stock market news, the yen saw a fall of ~0.2% to 142.68 per dollar, as summary of opinions from Bank of Japan’s policy meeting exhibited that policymakers are divided over if, and when, the central bank needs to move away from the current ultra-loose monetary situation. BOJ minutes remained dovish as certain members believed that upside inflation risks are now limited. Therefore, there is no need for ‘rapid tightening.’
Coming to the Indian markets, Nifty 50 opened at ~21,497.65 and it touched its fresh record high of ~21,675.75 during the trading session. Sensex opened at ~71,492.02 reached its fresh record high of ~72,119.85 levels on Wednesday.
Read Also: