At the global central bank annual meeting, Federal Reserve Chair Jerome Powell’s dovish signals have led to market expectations of a rate cut in September. This has driven Asian stock markets to rise on Monday (August 25), while gold prices have remained steady near two-week highs.
Futures markets are indicating that investors are betting over an 84% probability of a 0.25 percentage point rate cut at the Fed policy meeting on September 17, with expectations of at least a 100 basis point cumulative cut by mid-next year, bringing interest rates to 3.25% to 3.5%.
This shift has caused U.S. Treasury yields to decline, improving corporate earnings outlook, but it also indicates that policymakers see greater risks to employment and economic downturn.
Powell noted in his speech that risks in the job market are increasing and inflation remains a threat, calling the current economic situation “challenging.”
In the stock market, major Asia-Pacific indices rose on Monday.
The Nikkei index rose by 0.69% after opening, reaching 42,928.85 points; South Korea’s Composite Stock Price Index increased by 0.64% to 3,188.98 points. Australia’s S&P/ASX 200 index edged up by 0.12% to 8,978.20 points.
China and Hong Kong markets also showed strength, with the Shanghai Composite Index rising by 0.89% to 3,859.89 points, and the Hang Seng Index surging by 1.46% to 25,709.83 points.
Taiwan’s Weighted Index showed the most remarkable performance, rising by 2.13% after opening to close at 24,270.87 points.
In the previous trading day, the Dow Jones Industrial Average rose by 1.9%, reaching a historic closing high, the S&P 500 index increased by 1.5%, and the Nasdaq index surged by 1.9%.
The current focus in the market is turning towards Nvidia’s earnings report to be published on Wednesday this week, with expectations of second-quarter revenue reaching $45.9 billion, a 48% increase in earnings per share. Option markets indicate the stock price may experience significant volatility.
Gold prices remained stable near two-week highs on Monday, with spot gold at $3,369.59 per ounce, close to the level after a 1.1% increase last Friday.
Since the beginning of the year, gold prices have risen by over a quarter, mainly supported by geopolitical tensions, central bank buying, and hedging demand.
However, hedge funds have been reducing their long positions in recent days, hitting a six-week low, reflecting a more cautious stance among some investors. In other precious metals, spot silver was at $38.09 per ounce, down 0.2%; platinum at $1,356.95, down 0.3%; and palladium rose slightly by 0.6% to $1,119.67 per ounce.
The international oil market was supported as negotiations between Russia and Ukraine showed no progress, with Brent crude slightly rising to $67.31 per barrel and U.S. crude oil increasing by 0.2% to $63.78 per barrel.
Looking ahead, investors are focusing on the U.S. Personal Consumption Expenditures (PCE) price data to be released this Friday. The market generally expects the core inflation rate to rise to 2.9%, reaching the highest level since late 2023.
If the PCE data exceeds expectations, indicating persistent inflation, it could challenge the rally in U.S. long-term government bonds and put pressure on gold prices.
Analysts point out that although a rate cut in September is almost certain in the market, the future policy path remains uncertain because inflation has not fallen back to the target range, and signs of weakness are being seen in the job market.