Equities Mixed As The Yen Surges Higher & US Rate Cut Expectations

Asian equity markets are mixed this morning with Japanese equities facing pressure as the yen strengthened on speculation of BoJ intervention, impacting export stocks negatively. The market is now pricing about a 90% chance of a US rate cut in September following subdued US inflation data, this saw front-end US yields move about 10bps lower and we saw a rotation out of Mega cap tech stocks into more beaten up stocks which are more sensitive to interest rates. Meanwhile, Australian and New Zealand markets saw gains, supported by optimism around potential rate cuts and strong performances in banking sectors amid global economic uncertainties. Overall, market movements reflected a cautious stance amid fluctuating currency dynamics and expectations of central bank actions.

• Japanese equities are lower today, with the Nikkei falling by about 2% and the broader Topix Index dropping about 1%. This downturn was primarily driven by a surge in the yen's value overnight, which adversely affected exporters. Tokyo Electron was notably impacted, contributing heavily to the Topix's decline with a 4.1% decrease. The market sentiment was further dampened by concerns over potential Federal Reserve rate cuts following recent US inflation data, leading to cautious trading and increased volatility, especially among mega cap tech stocks.
• South Korean stocks have opened lower today, mirroring overnight losses on Wall Street where major tech shares faced significant sell-offs. The Kospi is 1.30% lower with the decline heavily influenced by profit-taking in major tech stocks, despite signs of cooling U.S. inflation that sparked hopes for a Federal Reserve rate cut later this year. Meanwhile, the KRW strengthened trading at 1,373.7, up 5.1 won from the previous session's close.
• Taiwanese stocks opened lower today, following a global trend of sell-offs in major tech shares amid hopes for a potential Federal Reserve rate cut later this year due to signs of cooling U.S. inflation. The Taiex is 1.7% lower in early trading, influenced by declines in the tech sector with semiconductor companies such as TSMC which is down 3.7% and MediaTek down 3.50% as investors look to profit-take after strong gains earlier in the year.
• Australian equities are higher today, and the ASX200 has made new all time highs. The positive sentiment was driven by data showing that U.S. inflation cooled broadly in June, bolstering the case for potential Federal Reserve rate cuts. Most sectors saw gains, with banks contributing the most to the gains. The ASX200 is 0.80% higher today.
• Elsewhere, New Zealand equities are 0.60% higher today, Singapore equities are 0.40% higher, Philippines equities are 0.10% higher, Indonesian equities are 0.65% higher & Malaysian equities are 0.20% lower