Asian Markets Rise, Dollar Strengthens After Last Week’s Decline

On Asian markets on Monday, stock prices rose as it became increasingly likely that the U.S. central bank would soon lower interest rates, while the dollar slightly strengthened against a basket of currencies after last week’s decline.

The MSCI Asia-Pacific index was up 0.4 percent at 7:00 AM. Stock prices in South Korea, India, Hong Kong, Shanghai, and Japan rose between 0.2 and 1.5 percent, while in Australia they fell by 0.3 percent.

Market support comes from investors’ belief that leaders of the U.S. central bank will lower interest rates by 0.25 percentage points at the mid-September meeting. Some analysts expect a cut of as much as 0.50 percentage points, given the weakness in the U.S. labor market.

On Friday, it was reported that in August, the number of employed in the U.S. increased by only 22,000, while analysts had expected an average of 75,000. The unemployment rate rose to 4.3 percent. Although a Fed rate cut is expected, trading on Asian markets is cautious for a number of reasons.

On Sunday, Japanese Prime Minister Shigeru Ishiba announced his resignation after being under pressure for a long time due to his party’s defeat in last year’s national elections.

This morning, weaker-than-expected data on Chinese foreign trade was released, indicating a slowdown in economic growth and problems after Washington imposed tariffs on imports of Chinese goods.

In August, Chinese exports rose by 4.4 percent year-on-year, less than the expected five percent. Imports, on the other hand, rose by 1.3 percent, while a growth of three percent was expected.

On the currency markets, the value of the dollar against a basket of currencies increased after last week’s decline. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 97.87 points this morning, compared to 97.73 points on Friday evening. The price of the euro slipped from 1.1717 to 1.1710 dollars.

The U.S. currency also strengthened against the Japanese yen, reaching an exchange rate of 148.25 yen, compared to 147.40 yen on Friday evening.

Oil prices, on the other hand, rose after falling more than 3 percent last week. On the London market, the price of a barrel strengthened by 1.18 percent to 66.25 dollars, while on the U.S. market, a barrel increased by 1.15 percent to 62.60 dollars. The Organization of the Petroleum Exporting Countries (OPEC) and its partners decided to increase production by 137,000 barrels per day starting in October, which is a significantly smaller increase than in previous months.