Nikkei 225 Rallies 1.73% as Yen Steadies; ASX 200 Falls on Gold and Mining Losses

US Equity Markets End September on a High

On Monday, September 30, the US equity markets closed the month on a positive note. The Nasdaq Composite Index and the S&P 500 gained 0.38% and 0.42%, respectively, while the Dow rose by 0.04%.

Fed Chair Powell Tempers Dovish Fed Rate Cut Bets

On Monday, Fed Chair Powell tempered bets on a 50-basis point November Fed rate cut. The Fed Chair emphasized there was no urgency to cut rates quickly, stating the US economy and labor market were solid.

According to the CME FedWatch Tool, the probability of a 50-basis point November Fed rate cut tumbled from 53.3% (September 27) to 38.0% (September 30).

Powell’s views on the Fed rate path set the tone for the Tuesday Asian session.

Expert Views on Fed Chair Powell’s Speech

Arch Capital Chief Global Economist Parker Ross commented on Powell’s remarks:

“Biggest Takeaway: “if the economy continues to perform as expected, we’re looking at two more rate cuts by year end – both 25bps cuts.“

Japan’s Unemployment Rate Drops to 2.5%

Economic data from Japan painted a rosier picture of the economy. The unemployment rate dropped from 2.7% in July to 2.5% in August. A tighter labor market could support wage growth and household spending, which may fuel demand-driven inflation.

A higher underlying inflation outlook may raise bets on a Q4 2024 Bank of Japan rate hike, supporting Yen demand. A stronger Yen could impact buyer appetite for Nikkei-listed export-focused stocks.

However, the USD/JPY advanced by 0.15% to 143.834 on Tuesday morning. Expectations of a less dovish Fed rate path countered better-than-expected labor market data from Japan.

Nikkei Index Advances as Yen Steadies

The Nikkei 225 rallied 1.73% on Tuesday morning. USD/JPY gains from Monday and the Tuesday morning session drove buyer demand for Nikkei-listed stocks.

Tokyo Electron (8035) rallied 3.30%, while Softbank Group Corp. (9984) gained 2.58%. Nissan Motor Corp. (7201) rose by a more modest 0.72%.

ASX 200 Retreats as Gold and Mining Stocks Slide

In contrast, the ASX 200 Index fell by 0.45% on Tuesday morning. Bank, gold, and mining contributed to the losses.

Mining giants BHP Group Ltd. (BHP) and Rio Tinto Ltd. (RIO) slid by 2.42% and 2.60%, respectively. Investors likely locked in profits as iron ore prices continued to trend higher on Tuesday, spurred by China’s policy measures.

Easing bets on a 50-basis point Fed rate cut impacted demand for Aussie banks. Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. (WBC) saw losses of 0.89% and 1.02%, respectively.

Powell also affected prices for spot gold, leaving Northern Star Resources (NST) down 0.72%.

With the focus remaining on the central banks, investors should stay alert. Traders should closely monitor the news wires, real-time data, and expert commentary to adjust trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.

Hang Seng Index and Mainland China Markets Closed

On Tuesday, there was no trading on the Hang Seng Index or Mainland China equity markets. Hong Kong and China’s Mainland markets are closed for the National Day holidays.