.jpg)
Investing.com — Asian stocks were mixed on Monday, with some support coming from expectations of a U.S. interest rate cut, although Japanese markets retreated amid pressure from the yen and bets on a rate hike by the Bank of Japan.
Regional markets received positive support from Wall Street, as US stock indexes approached record highs on Friday after comments from Federal Reserve Chairman Jerome Powell reinforced expectations of an interest rate cut in September.
U.S. stock index futures were steady in Asian trading, with focus turning to key inflation data due this week, as well as earnings from market darling Nvidia Corp. (NASDAQ:) for more cues on the artificial intelligence boom.
Japan’s Nikkei falls as yen rises sharply
Japanese stocks lagged behind on the yen’s strength, with the dollar and yen each down about 1%.
The yen, which measures the amount of yen needed to buy one dollar, fell 0.4 percent and was close to its lowest levels hit earlier in August, amid growing conviction that the Bank of Japan will raise interest rates further this year.
Dovish comments from Bank of Japan Governor Kawasaki Ueda reinforced this notion.
The strength of the yen has weighed on export-oriented Japanese stocks, while the prospect of higher interest rates has also provided headwinds for the technology and export sectors that fueled a rally in Japanese stocks earlier this year.
The yen’s appreciation also undermines the carry trade through the currency – which has been a vehicle for capital flows into higher-yielding Asian markets.
The Bank of Japan’s monetary policy report, due out later this week, is expected to provide further clues on the path of Japanese interest rates.
Rate Cut Hopes Provide Some Strength, China Lags
Except for Japan, most other Asian markets rose, tracking gains on Wall Street amid expectations of a U.S. interest rate cut.
The Australian stock index rose 0.6% and returned to record highs, while Indian stock index futures pointed to a somewhat positive opening.
South Korean stocks were steady, paring some losses in major chipmakers ahead of Nvidia Corp.’s results.
Hong Kong’s index rose 0.8%, recovering some of the sharp losses it suffered in the previous session, and also avoiding losses in mainland Chinese markets.
Chinese stocks and global stock indices fell 0.4% and 0.3%, respectively, due to ongoing concerns about a slowdown in the economic recovery.
Markets were also somewhat concerned by the People’s Bank of China withdrawing about 101 billion yuan ($14.2 billion) of liquidity from the open market.
Although the withdrawal appeared to be aimed at strengthening the yuan, it also raised concerns about the extent of support Beijing is mustering for the Chinese economy.
The slowdown in China has been a major point of contention in sentiment towards Asia, leaving Chinese markets significantly behind their peers.
