Asia-Pacific markets started the week on an uncertain footing amid rising Middle East tensions.
Investors also considered Fed Chair Jerome Powell’s recent hints at possible rate cuts.
The weekend saw a flare-up in the Middle East, with Israel’s Air Force targeting Hezbollah positions in Lebanon.
This strike came on the heels of the Iran-backed group’s barrage of over 320 rockets into Israel, which Hezbollah described as retaliation for the assassination of their senior commander, Fuad Shukr, last month.
However, both sides hinted at a reluctance to escalate further, with Israel’s Foreign Minister stating that the country was not seeking a full-blown conflict.
In the wake of these events, oil prices ticked up, with Brent crude rising 0.62% to $79.52 per barrel and U.S. West Texas Intermediate edging up 0.63% to $75.34.
Over in Asia, market participants are closely watching China’s central bank for its latest decision on medium-term lending rates, as well as Singapore’s manufacturing data for July.
Japan’s Nikkei 225 slid 1.09%, while the Topix dipped 1.13%.
The yen, seen as a haven in times of uncertainty, strengthened 0.33% to 143.9, its highest level since early August’s market turmoil.
Meanwhile, South Korea’s Kospi fell 0.24%, and the smaller Kosdaq declined 0.96%.
Australia bucked the trend with the S&P/ASX 200 climbing 0.68%.
Hong Kong’s Hang Seng index added 0.99%, although the mainland Chinese CSI 300 index nudged down 0.15%.
In the U.S., markets closed the previous week on a positive note following Powell’s remarks at Jackson Hole, Wyoming.
The Dow Jones Industrial Average climbed 1.14%, the Nasdaq Composite advanced 1.47%, and the S&P 500 gained 1.15%.
Powell’s comments, though cautious, hinted at upcoming rate cuts without specifying when or by how much.
“The time has come for policy to adjust,” Powell said, stressing that any moves would hinge on incoming data, the economic outlook, and the balance of risks.
In essence, while global markets grapple with geopolitical tensions and economic signals, investors are left balancing caution with optimism, navigating the complex currents of an uncertain world of business.
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