An electronic stock board displays the Nikkei 225 Stock Average outside a securities firm in Tokyo, Japan, on Tuesday, 6 August 2024. (Photo: Kiyoshi Ota/Bloomberg) The Nikkei 225 index rose as much as 1.9%, a day after the benchmark slumped almost 5% following the ruling party’s leadership race. A gauge of Asian equities advanced while Australian shares slipped. China and Hong Kong are closed for holidays. US equity futures inched higher after the S&P 500 rose 0.4% on Monday.
The yen weakened slightly against the dollar on Tuesday after Federal Reserve chair Jerome Powell said the central bank will lower interest rates “over time,”while re-emphasising that the overall economy remains on solid footing. Shigeru Ishiba is set to be confirmed as Japan’s new prime minister on Tuesday after the leadership battle with wrong-footing investors betting on more monetary stimulus from his rival.
Markets were also bracing for any impact from news that Israel had begun “targeted ground raids” in Lebanon. Oil steadied after a choppy on Monday as investors assessed the risks of a wider conflict in the Middle East.
In Australia, retail sales rose more than expected in August as tax cuts and warmer weather encouraged households to spend more. The Aussie led gains among G10 currencies.
In the US, the S&P 500 secured its fourth consecutive quarter of advances — the longest such winning stretch since 2021. The tech-heavy Nasdaq 100 notched a similar run.
“The bull market has survived the year’s historically weakest quarter, the third quarter, and it is likely to remain intact through at least the end of the year, as earnings remain strong, interest rates are moving lower and consumers are still spending,” said Emily Bowersock Hill at Bowersock Capital Partners.
“We expect the fourth quarter to be quite similar to the third quarter — elevated volatility, but with a strong finish,” she added.
US bond yields slipped after Powell said the US didn’t have the data yet to make a call on the November meeting.
Powell was “a tiny bit hawkish at the margin, but the Fed still has a lot of cutting to do,” according to Vital Knowledge’s Adam Crisafulli. The Fed Chair’s remarks seemed to suggest markets should think about a half-point of reductions instead of three-quarters of a point for the rest of the year, he added.
In other news, Warren Buffett’s Berkshire Hathaway Inc. is planning its second yen bonds sale this year in the global markets, raising speculation it is looking to boost investments in Japan.