Asian Shares Edge Higher Amid Geopolitical Tensions and Rate Cut Hopes

Asian shares cautiously moved higher on Monday, supported by a decline in the dollar and bond yields as investors anticipated key inflation data that could signal upcoming rate cuts in both the United States and Europe. However, lingering concerns over geopolitical tensions in the Middle East and upcoming corporate earnings kept market sentiment in check.

• Oil Prices Surge: Brent crude rose by 55 cents to $79.57 a barrel, while U.S. crude increased by 56 cents to $75.39 per barrel. This rise was driven by fears of potential supply disruptions following rocket exchanges and airstrikes between Israel and Hezbollah over the weekend.
• Nvidia Earnings Awaited: Investors are closely watching Nvidia’s earnings report scheduled for Wednesday. The semiconductor giant’s stock has surged by approximately 150% this year, contributing significantly to the S&P 500’s 17% year-to-date gain. Nvidia will need to deliver exceptional results, with sales expected to exceed $30 billion and guidance for Q3 above $33 billion, to meet the market’s high expectations.
• Market Movements:
• S&P 500 and Nasdaq futures: Both were steady after initially starting slightly lower.
• EUROSTOXX 50 futures: Dipped 0.2%, while FTSE futures were closed due to a holiday.
• MSCI’s Asia-Pacific Index: Outside Japan, the index rose 0.8%, following a 1.1% increase last week. South Korea’s market remained relatively unchanged, and Chinese blue chips were nearly flat.
• Japan’s Nikkei: Dropped 1.0% as a stronger yen weighed on exporter stocks.
• Yen Strengthens: The yen gained ground against a weaker dollar following comments from Federal Reserve Chair Jerome Powell. Powell indicated that the time for easing monetary policy had arrived, stressing that the Fed did not want to see further deterioration in the labor market.

This cautious optimism reflects a delicate balance between hope for economic relief through rate cuts and concerns over ongoing geopolitical and corporate uncertainties.