Shares in Asia rise on Fed rate cut bets; dollar steadies
U.S. shares rallied on Monday on generally positive earnings reports and increasing bets for a September rate cut from the Fed after disappointing jobs data on Friday.
Oil prices edged lower after output increases by OPEC+, while gold hovered near a one-week high and Vietnamese shares climbed to a new record high.
"There are signs of weakness in parts of the U.S. economy, that plays to the view that maybe not in September, but certainly this year that the Fed's still on course to ease potentially twice," said Rodrigo Catril, senior currency strategist at National Australia Bank.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab rose 0.6%, while Japan's Nikkei gauge climbed 0.7% after falling by the most in two months on Monday.
Pan-region Euro Stoxx 50 futures were up 0.2%, while German DAX futures were up 0.3% and FTSE futures rose 0.3%. U.S. S&P 500 e-mini stock futures rose 0.2%.
The dollar was flat at 147.09 yen, and the euro was down 0.1% on the day at $1.1557. The dollar index , which tracks the greenback against a basket of major peers, rallied 0.2% after a two-day decline.
Friday's soft U.S. nonfarm payrolls data added to the case for a cut by the Fed, and took on another layer of drama with Trump's decision to fire the head of labor statistics responsible for the figures.
Odds for a September rate cut now stand at about 94%, according to CME Fedwatch, from a 63% chance seen on July 28. Market participants see at least two quarter-point cuts by the end of this year.
News that Trump would get to fill a governorship position at the Fed early also added to worries about politicisation of interest rate policy.
Trump again threatened to raise tariffs on goods from India from the 25% level announced last month, over its Russian oil purchases, while New Delhi called his attack "unjustified" and vowed to protect its economic interests.
Oil prices fell on mounting oversupply concerns, with the potential for more Russian supply disruptions providing support after Trump said he could impose 100% secondary tariffs on Russian crude buyers such as India.
Brent crude futures fell 0.1%, to $66.21 a barrel.
Second-quarter U.S. earnings season is winding down, but investors are still looking forward to reports this week from companies including Walt Disney (DIS.N), opens new tab and Caterpillar (CAT.N), opens new tab.
Tech heavyweights Nvidia (NVDA.O), opens new tab, Alphabet (GOOGL.O), opens new tab and Meta (META.O), opens new tab surged overnight, and Palantir Technologies (PLTR.O), opens new tab raised its revenue forecast for the second time this year on expectations of sustained demand for its artificial intelligence services.
"Company earnings announcements continue to spur market moves," Moomoo Australia market strategist Michael McCarthy said in a note.
Data today from Asia's two biggest economies showed resilience in their service sectors. In Japan, the S&P Global final services purchasing managers' index (PMI) to 53.6 in July from 51.7 in June for the strongest expansion since February. China's services activity last month at its fastest pace in more than a year.
China's blue-chip CSI300 Index (.CSI300), opens new tab climbed 0.4%, while the Shanghai Composite Index (.SSEC), opens new tab gained 0.6%. Vietnam's (.VNI), opens new tab gauge of shares surged 2.4% and touched a fresh record high.
Bitcoin fell 0.4% to 114,448.59 while spot gold was slightly lower at $3,368.44 per ounce.
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