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Asian stocks rise on Fed-rate cut bets

  • Asian stocks are flashing green after gains on Wall Street.
  • Traders have increased bets that the Fed could cut deeper this month.

Asian stocks are solidly bid this Friday on the rising odds of aggressive rate cuts by the US Federal Reserve (Fed).  

As of writing, Japan’s Nikkei is up 1.65% or 365 points and the Shanghai Composite is adding 1.12% or 32 points. Shares in South Korea and Hong Kong are also up 1% and Australia’s S&P/ASX 200 is reporting a 0.85% or 56 point rise.

New York Federal Reserve President John Williams said Thursday the central bank needed to “act quickly” when the economy was slowing and rates were low. As a result, Treasury yields softened with the 10-year shedding almost seven basis points to 2.01% and the probability of the Fed cutting rates by 50 basis points on July 31 rose to 42%.  

The rising odds of Fed rate cuts also helped the major US indices eke out gains for the first time in three trading days. The S&P 500 adding 0.4% higher and the Nasdaq Composite rose 0.3%. The Dow Jones Industrial Average ended with marginal gains.

The dovish Fed expectations are helping markets stay in the green despite tensions in the Middle East. The US President Donald Trump said on Thursday that an American Navy ship had destroyed an Iranian done in a “defensive action. “ The announcement came hours after  Iranian forces seized a foreign tanker it accused of smuggling oil, according to CNBC.

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