Asian equities rose slightly on Tuesday, staying just off their lowest level since November 2022. Meanwhile, the dollar weakened as traders refrained from making bets ahead of upcoming economic data that could provide insight into the next moves by the U.S. Federal Reserve.
Oil prices rebounded from the previous day’s losses due to concerns that the Israel-Hamas conflict could escalate and impact the oil-exporting region.
MSCI’s broadest index of Asia-Pacific shares outside Japan, the (.MIAPJ0000PUS), recovered from earlier losses and traded 0.41% higher at 476.72. This was an improvement from its previous level of 472.73, which was the lowest since November 2022.
The index has declined by 3% this month and is on track for its third consecutive month in the red. Japan’s Nikkei (.N225) also rebounded, rising 0.21% after an earlier slide of up to 1.4%.
European stocks are expected to open lower, with futures indicating a decline for the Eurostoxx 50, German DAX, and FTSE.
Dalma Capital Chief Investment Officer Gary Dugan expressed concerns about the potential impact of rising oil prices on inflation, stating that if oil prices remain at current levels, it could inject further inflation into the global economy.
Investor focus this week will be divided between the earnings reports of high-profile companies such as Microsoft (MSFT.O), Meta Platforms (META.O), and Amazon (AMZN.O), as well as a slew of economic data leading up to the Fed’s meeting at the end of the month.
Key economic data to watch includes the announcement of third-quarter gross domestic product by the U.S. Commerce Department and the release of the Personal Consumption Expenditures (PCE) report, which is the U.S. central bank’s preferred inflation gauge.
Before these releases, investors will analyze the flash purchasing managers’ index (PMI) data from Britain, France, the Eurozone, and the United States.
The data releases precede upcoming Central Bank Meetings, with the European Central Bank expected to keep rates steady based on a RushHourDaily poll of analysts.
China shares remained under pressure, with Hong Kong’s Hang Seng Index (.HSI) sliding 0.68%, while the Shanghai Composite Index (.SSEC) rose 0.32%. China’s blue-chip CSI300 Index (.CSI300) was flat after closing at its lowest level in 4-1/2 years.
Investor confidence in China remained weak despite efforts by the state fund Central Huijin to bolster the market by buying exchange-traded funds.
The yield on the benchmark 10-year U.S. Treasury note rose slightly to 4.846% in Asian hours on Tuesday, following a decline after briefly rising above 5.0%.
The increase in Treasury yields, which are seen as a safe haven in times of economic uncertainty, has been driven by expectations of stronger U.S. growth.
Billionaire investor Bill Ackman covered his previous bets against Treasuries, anticipating that the Israel-Hamas conflict would lead to increased investment in U.S. Treasuries.
In the currency market, the dollar weakened against a basket of currencies after a 0.5% drop. The dollar index was 0.076% lower at 105.52. The yen also faced pressure but found some relief from the dollar’s retreat.
Cryptocurrencies saw renewed interest, with bitcoin reaching an 18-month peak of $35,198 before settling at $34,427, up 4% for the day. This was driven by speculation about the possibility of an exchange-traded fund and short-sellers exiting their positions.
In commodities, U.S. West Texas Intermediate crude futures rose 0.32% to $85.76 per barrel, while Brent was up 0.33% at $90.13. Spot gold also increased by 0.2% to $1,975.49 an ounce.
Overall, investor sentiment remained cautious as they awaited economic data and central bank meetings in the coming weeks.
