Asian stocks and bonds are poised for gains, mirroring a strong performance on Wall Street as a drop in oil prices alleviated worries about inflation and renewed investor appetite for risk. Equity-index futures for Japan, South Korea, and Australia all indicated an upward trend at the market open. US stock contracts remained largely unchanged after underlying benchmarks achieved their largest advance in six weeks, with the S&P 500 climbing 1.1% and the tech-heavy Nasdaq 100 rising 1.7%. A key index of chipmakers saw a significant jump of 3.1%.
The yen remained stable ahead of the Bank of Japan's rate decision. Julian Emanuel, chief equity and quantitative strategist at Evercore ISI, discussed the market implications of the Federal Reserve's first interest rate hike in three years, suggesting investors should rebalance portfolios by shifting some assets from stocks into fixed income.
This positive market sentiment follows a rebound in stocks and Treasuries after a post-Fed-day dip, as slipping oil prices hinted at easing supply disruptions in the Middle East. While Citadel Securities' Scott Rubner noted that September could still be volatile for equities, he suggested that "the setup is beginning to change." The Bank of Japan is widely anticipated to deliver its second rate hike in three months, though strategists caution that the yen might weaken unless officials can convince markets of further tightening measures. Conversely, a hike could make the yen carry trade less attractive by increasing the cost of borrowing the currency.
