(Bloomberg) — Asian stocks posted a modest gain and gold hit a record with traders positioning for an interest-rate cut by the Federal Reserve as early as this month.
Shares in Japan and South Korea rebounded from their losses Monday while indexes in China and Hong Kong retreated. Oil drifted higher with attention on an upcoming OPEC+ meeting. The yen fell 0.3% against the dollar after Bank of Japan Deputy Governor Ryozo Himino’s speech provided few clues on the future direction of interest rates.
Gold hit a record of over $3,500 an ounce, before trimming some of that gains. The Treasury curve steepened as cash trading resumed following the Labor Day weekend in the US. The yield on Treasury two-year notes inched up one basis point to 3.63% and that on 10-year debt rose two basis points to 4.25%. Japan’s 10-year note futures ticked higher with investors focused on an auction of this tenor later on Tuesday.
After a selloff in technology shares in Wall Street Friday, the record-breaking stock rally faces a pivotal test this month, with jobs numbers, inflation data and the Federal Reserve’s rate call all landing within the next three weeks. Tariff tensions and questions over the Fed’s independence are also compounding the risks in September, historically the weakest month of the year for US markets.
“With a US policy rate cut looking likely, money is shifting from the dollar to global markets,” said Kazuhiro Sasaki, head of research at Phillip Securities Japan. “Rate cut expectations are also a catalyst for rate-sensitive sectors like real estate and cyclical names,” he said.
Traders’ attention Tuesday was on gold, the go-to haven in times of political and economic turmoil that also tends to benefit from lower rates. The metal has also found support this year as investors seek safety from market turmoil fueled by US President Donald Trump’s global trade war.
Trump’s escalating attacks on the Fed has become the latest cause for investor alarm, with concerns over the central bank’s independence threatening to erode confidence in the US.
Another key factor for the markets is the Cboe Volatility Index sitting at 16.12, not far off its 2025 closing low of 14.22.
“The fact that investors are still betting heavily on new lows in volatility, even with VIX at what appears to be a floor, and with markets up sharply from their April lows to all-time highs, should be viewed with caution,” said Jeff Jacobson, a strategist at 22V Research, in a note Monday.
It’s a crucial time for the markets with major catalysts beginning to hit starting Friday with the monthly jobs report.
Then, inflation takes the stage with the consumer price index report arriving on Sept. 11 and on Sept. 17, the Fed will give its policy decision and quarterly interest-rate projections. Swaps markets are pricing in roughly 90% odds that the Fed will cut them at this meeting.
“The bar to derail a Fed rate cut on Sept. 17 appears high,” Deutsche Bank AG economist Peter Sidorov wrote. “But with Fed funds futures now pricing over 140 basis points of easing by the end of 2026, markets are expecting an amount of easing that since the 1980s has only occurred around recessions.”
Meanwhile, Trump said India offered to cut its tariff rates following the US imposition last week of 50% levies as punishment for its purchases of Russian oil.
In Indonesia, stocks rebounded Tuesday after the nation’s finance minister pledged to improve the government’s policies, a move seen to ease political tensions.
Corporate News:
Nestlé SA dismissed Chief Executive Officer Laurent Freixe after only a year due to an undisclosed workplace affair, extending the management turmoil at the world’s biggest food company that’s known for its conservative corporate culture. Aux Electric Co., a Chinese air conditioner maker, fell in its Hong Kong trading debut after an initial public offering that raised HK$4.15 billion ($532 million). New World Development shares fell as much as 4.1% in HK after the company said it hasn’t received any funding proposals. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 12:02 p.m. Tokyo time Japan’s Topix rose 0.5% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng fell 0.4% The Shanghai Composite fell 1.1% Euro Stoxx 50 futures were unchanged Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.1% to $1.1698 The Japanese yen fell 0.3% to 147.65 per dollar The offshore yuan fell 0.1% to 7.1429 per dollar Cryptocurrencies
Bitcoin rose 1.2% to $110,143.14 Ether rose 1.6% to $4,356.64 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.25% Japan’s 10-year yield was unchanged at 1.625% Australia’s 10-year yield advanced four basis points to 4.36% Commodities
West Texas Intermediate crude rose 1.5% to $64.95 a barrel Spot gold rose 0.5% to $3,492.98 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Alice French, Joanna Ossinger and Mark Cranfield.
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