Asian Markets Follow Wall Street’s Rise, Dollar Strengthens

The MSCI Asia-Pacific index was up 0.1 percent at 7:00 AM and is on track for a weekly gain of about two percent. This morning, stock prices in India and Hong Kong fell between 0.1 and 0.9 percent, while in Australia and Japan they rose between 0.4 and 1.6 percent. In China and South Korea, there is no trading today due to holidays. The decline in stock prices in India and Hong Kong is mainly a result of a correction following yesterday’s significant rise.

Other exchanges in the region are following yesterday’s slight, yet still positive, rise of Wall Street. The Dow Jones increased by 0.17 percent, while the S&P 500 rose by 0.06, and the Nasdaq index by 0.39 percent.

The Nasdaq’s growth was primarily due to the rise in stock prices of technology giants Nvidia and Apple, but it remained a few points below its record level, unlike the Dow Jones and S&P, which managed to reach new all-time highs.

Trading was cautious as there were no significant economic reports, given that federal agencies are temporarily closed due to Republicans and Democrats in Congress failing to reach an agreement on further funding for these agencies.

Investors are not overly concerned about the temporary closure of federal agencies as this happens almost every year at this time and has not significantly impacted the economy and financial markets so far. However, analysts warn that this stalemate could last.

– Given the polarization of the two parties and that both sides are firmly holding their positions, with no signs of either side backing down, I would not be surprised if the federal agencies’ shutdown lasts for a longer period – says Jim Baird, director at Plante Moran Financial Advisors.

Market support, however, comes from investors’ hopes for further interest rate cuts by the U.S. central bank. Given that all recent labor market data indicates weakness in that market, most analysts estimate that the Fed will cut rates two more times by 0.25 percentage points each by the end of the year.

On the currency markets, the value of the dollar against a basket of currencies has risen. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 97.89 points this morning, while it was 97.45 points at the same time yesterday. Meanwhile, the price of the euro slipped from yesterday’s 1.1740 to 1.1720 dollars.

The U.S. currency has also strengthened against the Japanese yen, with the dollar exchange rate reaching 147.50 yen, compared to 147.05 yen at the same time yesterday. Oil prices, on the other hand, have risen after falling about 2 percent yesterday and hitting their lowest levels in four months. On the London market, the price of a barrel has strengthened by 0.64 percent to 64.50 dollars, while on the U.S. market, a barrel has increased by 0.63 percent to 60.90 dollars.