Asian stocks experienced cautious gains on Tuesday, June 16, following a rally in the previous session spurred by news of a US-Iran peace deal. However, this initial optimism began to wane as markets adopted a more measured tone regarding Gulf developments, with the durability of the deal and specifics like Iran's nuclear program still needing to be resolved in future negotiations, according to Westpac analysts CNA.
The Bank of Japan (BOJ) was a key focus, as it voted 7-1 to raise its benchmark policy rate to 1%, a 31-year high last seen in 1995. This led the Nikkei 225 to jump between 0.6% and 0.9%, briefly surpassing the 70,000 mark to set an all-time peak CNA, in.marketscreener.com, businesstimes.com.sg. The yen was largely flat against the dollar, trading around 160.215 to 160.31 CNA, businesstimes.com.sg, in.marketscreener.com. MSCI's broadest index of Asia-Pacific shares outside Japan saw a 0.4% increase, with South Korean shares rising between 2% and 2.3% CNA, businesstimes.com.sg, in.marketscreener.com. In contrast, Hong Kong stocks were dragged down by weaker-than-expected retail sales and fixed-asset investment data from China in.marketscreener.com.
Oil prices reflected the tempered optimism, with Brent crude futures sliding 0.3% to a three-month low of US$82.90 to US$82.96 a barrel CNA, businesstimes.com.sg, in.marketscreener.com. Shippers in Asia and Europe indicated that rebuilding confidence for transit through the Strait of Hormuz could take weeks CNA. On Wall Street overnight, stocks and bonds had rallied on initial optimism over the deal, with the S&P 500 jumping 1.7% and the Nasdaq Composite surging 3.1%, and both the Dow Jones Industrial Average and STOXX 600 closing at record highs CNA.
Investors are now looking ahead to a press briefing by Bank of Japan Deputy Governor Shinichi Uchida to explain the central bank's rate hike decision, as Governor Kazuo Ueda is absent due to medical treatment CNA. Additionally, attention is shifting to the US Federal Reserve's stance on interest rates, with current market expectations suggesting rates will remain in the 3.5% to 3.75% range. A crucial point for traders is whether the physical oil market validates the peace dividend through normalized flows, as this will influence inflation expectations and central bank patience investing.com. The US dollar index was up 0.1% at 99.75, and the yield on the US 10-year Treasury bond was up 0.4 to 0.8 basis points, at 4.471% to 4.475% CNA, businesstimes.com.sg.
Gold saw a 0.4% increase, reaching US$4,321.22 to US$4,324.32 an ounce CNA, businesstimes.com.sg. In cryptocurrencies, Bitcoin was down 0.8% at US$65,799.61, while Ether fell 2.1% to US$1,762.15 CNA.
