Asian shares and bonds rallied on Tuesday, mirroring Wall Street's performance, following Federal Reserve's dovish remarks suggesting that rising Treasury yields could deter further rate hikes. This news led to a decrease in 10-year Treasury yields, indicating a rise in bond prices, and softened the dollar as U.S. interest rate expectations adjusted.
The ongoing Middle East conflict between Israel and Hamas continued to be a focal point for markets. Israel's mobilization of an unprecedented 300,000 reservists and the possibility of a ground assault have heightened market vigilance. According to Kerry Craig of JPMorgan Asset Management, the uncertain market implications of these Middle East developments are challenging to assess.
This geopolitical tension led to a slight decline in oil prices following Monday's surge, but also bolstered safe-haven assets like spot gold. Despite the dip in oil prices, U.S. energy shares, represented by the S&P 500 energy index, saw a 3.5% rise.
Performance of key indices such as MSCI's Asia Pacific stocks outside Japan, Japan's Nikkei average, and Australia's S&P/ASX 200 was influenced by these developments and saw increases. E-mini futures for the S&P 500 index suggest higher openings for U.S. markets.
China's largest private property developer, Country Garden Holdings, warned of potential difficulties in meeting offshore payment obligations, adding strain to China's property sector. This warning raised additional concerns in the market.
Analysts from the National Bank of Australia noted initial risk aversion response in assessing the market impact of these developments. The upcoming release of U.S. inflation data and China credit data are also expected to influence markets.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.