Asian Markets Hold Steady, Awaiting U.S. Policy Signals and Key Central Bank Decisions

Asian stocks maintained their position near a two-year peak on Thursday, as traders eagerly awaited further guidance on U.S. monetary policy. The Bank of England (BoE), Swiss National Bank (SNB), and Norges Bank (Norway’s central bank) were all set to announce their policy decisions, further shaping the global interest rate outlook.

MSCI’s broad Asia-Pacific index remained relatively unchanged, hovering just below its recent two-year high, driven primarily by the performance of tech stocks. European markets were poised for a positive opening, with Eurostoxx 50 and FTSE futures pointing higher ahead of the central bank announcements.

The British pound held steady against the dollar in cautious trading, despite a slight decline in June. Recent data revealed that UK inflation had returned to the Bank of England’s 2% target, but strong underlying price pressures suggest an interest rate cut is unlikely before the upcoming election. While most economists anticipate the BoE will begin cutting rates in August, market expectations lean towards September or November.

The Swiss National Bank is widely expected to deliver its second consecutive 25 basis point rate cut, while Norway’s central bank is likely to maintain its current policy interest rate. These decisions will contribute to the broader narrative surrounding global monetary policy.

In Asia, Japan’s Nikkei edged higher, while Chinese and Hong Kong markets faced downward pressure due to lackluster property shares. China’s decision to leave its benchmark lending rates unchanged, despite recent signs of economic weakness, also weighed on sentiment. The onshore yuan weakened past 7.26 per dollar, reaching its lowest level since November.

Global Tech Rally Continues

The global tech rally continued, with U.S. markets closed on Wednesday and Nasdaq futures pointing higher on Thursday. Nvidia’s recent surge, propelled by the artificial intelligence frenzy, made it the world’s most valuable company, further fueling enthusiasm for tech stocks in both the U.S. and Asia. However, some analysts caution that the rally may be built on a shaky foundation, citing concerns about market breadth and participation.

Investors Seek Clarity on Fed Policy

On a broader macro level, investors are keen for further signals on the Federal Reserve’s policy trajectory. After projecting just one rate cut this year, Fed policymakers have remained cautious in their recent communications, leaving market participants eager for more definitive guidance.