FX.co ★ Asian Shares Climb On Rate Cut Optimism

Asian stock markets experienced healthy gains on Tuesday, fueled by expectations that the U.S. Federal Reserve might initiate interest rate cuts later this year. The Japanese Yen experienced a dip, consequently driving Japanese markets to a three-week peak. Meanwhile, the Australian Dollar slightly fell and bonds rallied on the back of the Reserve Bank of Australia keeping interest rates steady, signaling a less aggressive policy approach than previously anticipated.

In China, recent data highlighted strong tourism levels during the Labour Day holiday, exceeding pre-pandemic metrics. At the same time, cities such as Shenzhen and Wuhan further relaxed home purchase restrictions to bolster sales. This change aims to address the ongoing slump in China's property market.

Gold pricing, however, slipped after a few Federal Reserve officials made hawkish comments. Conversely, oil prices remained stable, even as Israel dismissed Hamas's assertion that it agreed to a ceasefire proposal to halt the Gaza fight.

China's Shanghai Composite index increased by 0.22%, closing at 3,147.74 points, and reversing an initial dip. The Hang Seng index in Hong Kong, on the other hand, descended 0.53% to 18,479.37 points, marking the end of its 10-day winning streak.

Japanese markets picked up as trading resumed after a holiday, with the Nikkei average rising 1.57% to 38,835.10 points, a three-week record. Meanwhile, the broader Topix index went up by 0.65%, rounding out at 2,746.22 points.

Tech stocks led the gains after Apple reported strong sales for the last quarter. Among the notables, Advantest stock rose by 2.3%, SoftBank Group by 3.7%, Tokyo Electron by 5.2%, and Disco Corp by a whopping 8.9%. Nikkei heavyweight Fast Retailing also experienced a 3.2% gain.

Meanwhile, an independent survey revealed that Japan's service-sector activity accelerated at its fastest in eight months this past April due to an uptick in business and consumer spending.

In South Korea, trading resumed after an extended holiday weekend, with the Kospi average rallying 2.16% to 2,734.36 in a catch-up trade. Tech stocks enjoyed particular success, with Samsung Electronics and SK Hynix increasing by 4.8% and 3.7%, respectively.

Australian markets demonstrated their most considerable gain in three months following the RBA's decision on interest rates. The benchmark S&P ASX 200 rose by 1.44% to end at 7,793.30, while the broader All Ordinaries index marked a 1.42% increase, closing at 8,065.50 points.

Overall, gains were widespread, with power producer AGL Energy seeing its shares soar by 7.4% following the company's increased profit projection for fiscal year 2024. Despite first-half earnings falling short of projections, lender ANZ also saw a minor increase.

Meanwhile, New Zealand's benchmark S&P NZX-50 index dipped slightly, by 0.17% to 11,800.78.

The U.S. stock market also enjoyed overnight gains courtesy of robust Q1 earnings reports and anticipation of possible interest rate cuts by year-end. The tech-centric Nasdaq Composite escalated by 1.2%, the S&P 500 achieved a 1% increase, and the Dow gained a modest 0.5%, recording its fourth consecutive daily increase.