Asian markets opened broadly higher on Tuesday, buoyed by growing expectations that global central banks, particularly the Federal Reserve and the European Central Bank, may soon begin to loosen monetary policy. Investor sentiment in the region was also lifted by a rebound in tech stocks and stabilising commodity prices.
Tokyo’s Nikkei 225 rose more than 1.1% in early trade, led by gains in chipmakers and export-heavy industrials as the yen stayed weak against the dollar. Hong Kong’s Hang Seng jumped nearly 2%, rebounding from recent lows with strong performance from Chinese property and tech shares. Shanghai’s Composite Index also edged higher, supported by state-linked buying and cautious optimism about potential stimulus measures in China.
Australia’s ASX 200 added 0.5% despite weaker-than-expected retail sales data, which some analysts interpreted as increasing the likelihood of a rate cut by the Reserve Bank of Australia later in the year.
The rally across Asia comes amid a broader narrative shift in global markets. Investors are beginning to price in the possibility that major central banks may pivot toward easing policy as inflation shows signs of cooling and growth indicators moderate. In particular, comments from Federal Reserve officials have suggested a growing openness to cutting rates if inflation continues to slow without risking recession.
Attention now turns to Europe, where markets are expected to open cautiously higher. Traders are awaiting fresh eurozone inflation data due later this week, which will be critical in shaping expectations for the ECB’s next move. The euro has been relatively steady in early currency trading, and bond yields across the continent are inching lower in anticipation of dovish signals.
In the United States, futures point to a mixed open, with the S&P 500 and Nasdaq indicating slight gains while the Dow Jones appears flat. Investors are awaiting a series of economic reports, including April’s Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge, set to be released later in the week. Fed officials are also scheduled to speak throughout the day, and markets will be parsing their comments for any hint of a policy shift.
Tech stocks could see renewed momentum, especially following Nvidia’s rally last week and the continued AI-driven enthusiasm. However, broader market sentiment remains delicately balanced between optimism over potential rate cuts and concern that central banks may remain cautious for longer.
For now, the global narrative is one of hope and hesitation, with markets drifting upward but looking for confirmation from hard data and central bank rhetoric before fully committing to a rally.
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