FX168 Financial News Agency (Asia Pacific) News: Asia stocks rose on Monday, September 23, as the market expected the Fed meeting to bring two rate cuts, while key US inflation data is expected to pave the way for more easing policies.

Trading volumes were thin due to a holiday in Japan, with MSCI Asia Pacific ex-Japan index rising by 0.3%, bouncing back by 2.7% last week. Major indexes in Singapore reached their highest levels since the end of 2007.

Tokyo's Nikkei index was closed, but futures trading price was at 38,510, while the spot closing price was at 37,723. As the yen retraced from its high, the Bank of Japan (BOJ) indicated no rush to tighten policy further, with the index rising by 3.1% last week. #DecisionAnalysis#

The European Stoxx 50 Index opened up 0.18%, the German DAX Index rose 0.25%, the UK FTSE 100 Index fell 0.03%, and the French CAC 40 Index fell 0.03%.

S&P 500 futures rose by 0.3%, Nasdaq futures rose by 0.6%. The S&P 500 index has risen by 1% so far in September, typically the worst performing month for stocks, but up by 19% year-to-date, hitting historical highs.

Last Friday, US exchanges traded over 20 billion shares of stock, marking the busiest trading day since January 2021. Analysts at Bank of America noted that the S&P 500 index typically sees an average increase of 21% in the 12 months after the Fed starts cutting rates, without an economic recession.

The market continues to benefit from the aftermath of the Fed's half percentage point rate cut, with futures indicating a 50% chance of another significant rate cut in November.

Barclays economist Christian Keller said: "Although this move had been foreshadowed, its significance cannot be overstated considering the Fed's role in global US dollar liquidity."

We note that the Fed started a rate cut cycle with a 50 basis point cut without an imminent financial crisis or actual unemployment, which is very rare. Therefore, we believe that this move demonstrates the Fed's determination to avoid deterioration in the labor market or, in market terms: achieve a soft landing.

At least nine Fed policymakers will speak this week, including Chairman Jerome Powell, two governors, and New York Fed President John Williams' prepared remarks.

More rate cuts

This Friday, the Fed's preferred inflation gauge - Core Personal Consumption Expenditures (PCE) data will be released. Analysts expect a 0.2% increase month-on-month, reaching an annual rate of 2.7%, while the overall index is expected to drop to 2.3%.

This week also includes global manufacturing surveys, U.S. consumer confidence, and durable goods orders data.

The Swiss National Bank will hold a meeting on Thursday, and the market fully expects it to cut rates by 25 basis points to 1.0%, with a 41% chance of a 50 basis point cut. The Swedish central bank will meet on Wednesday, also expected to cut rates by 25 basis points, with some possibility of a larger rate cut.

The only central bank not cutting rates is the Reserve Bank of Australia (RBA), which will meet on Tuesday, expected to almost certainly keep rates at 4.35% due to stubborn inflation.

Investors are also closely monitoring the U.S. government shutdown negotiations, as $1.2 trillion in funds will expire on September 30. House Republican Speaker Mike Johnson presented a three-month temporary funding bill on Sunday, but it still needs to be voted on.

In the currency market, the US dollar rose from a low point of 139.58 to 144.30 against the Japanese yen, up 0.3%, rebounding 2.2% last week. The euro rose by nearly 3% against the Japanese yen to 161.09 yen, while remaining strong against the US dollar, trading at 1.1160 dollars.

The Liberal Democratic Party of Japan, which holds a majority of seats in parliament, will elect a new leader on September 27, with the winner succeeding the outgoing Prime Minister Fumio Kishida.

In terms of commodities, the Fed's rate cut combined with lower bond yields helped maintain gold prices at historical highs, reaching a daily high of $2,630.93. Last week, net long positions in gold futures on the New York Mercantile Exchange reached their highest level in four years, indicating potential risks of a short-term pullback.

Due to tensions in the Middle East, Israel attacked Hezbollah targets, leading to further oil price increases. Last week, oil prices rose by about 4%, as hopes for lower borrowing costs would support global economic growth and demand. Brent crude oil rose by 60 cents to $75.09 per barrel, while US crude oil rose by 63 cents to $71.63 per barrel.