Asian Stocks Rise on US-China Tariff Truce and Interest Rate Hopes
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After a long weekend, Japan's Nikkei climbed 2% to a record high as tech shares gained. Australia's benchmark index also hit an all-time high ahead of the Reserve Bank of Australia's policy meeting, which is expected to deliver a rate cut.
Mixed Performance Across Asia
The MSCI Asia-Pacific index outside Japan (YTD -3.11%) rose by an unappreciable margin, and China's CSI 300 (YTD -24%) remained flat. Early trading results in Hong Kong showed the Hang Seng at 0.1% lower than yesterday. Markets have remained in tight ranges recently as investors wait to see if the U.S. and China can reach a lasting trade deal or if tariffs will return.
AMP chief economist Shane Oliver called the truce a "removal of an immediate threat" and added it was giving markets some space. This year, the United States and China have met for several rounds of negotiations in Europe as they aim to dial back previous tariff increases.
Inflation & Central Banks
Investors' attention is now on a busy week of significant economic events. The Reserve Bank of Australia is set to slash rates by 0.25 percentage points this afternoon, and another cut is expected in November. The bank offered little guidance on upcoming policy moves, leaving traders to interpret what will come next.
In the U.S., July consumer price index data is due later today. According to economists, expected core inflation is 0.3% month-on-month, an increase from June's 0.2%. A higher-than-expected number would test expectations that the U.S. Federal Reserve will deliver multiple rate cuts this year. Investment bank J.P. Morgan expects the Fed to cut rates as soon as September and deliver four cuts through 2025.
Commodities and Currencies Stay Calm
Spot gold was up 0.6% at $3,354 an ounce after dropping 1.6% on Monday when Trump said that imported Swiss-made gold to the United States would not have tariffs. Oil fetched about the same before Trump was to meet Russian President Vladimir Putin on Aug. 15 to broker peace in Ukraine.
The dollar was flat against the euro and yen in quiet currency markets. Bitcoin was marginally down, and Ethereum rose by 1% to $4290.
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