Daijiworld Media Network – Singapore
Singapore, Jun 16: Asian stocks edged higher on Tuesday following a strong rally in the previous session, as investors weighed the impact of the recently announced US-Iran peace agreement while turning their attention to a series of key central bank policy decisions across the region.
Trading in Asia adopted a cautious tone after the initial optimism surrounding the preliminary agreement between Washington and Tehran began to ease.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent, with South Korean markets leading the gains. However, Japan's Nikkei 225 slipped 0.2 per cent after touching a record high, while S&P 500 e-mini futures were down 0.1 per cent.
Oil prices remained under focus after falling to a three-month low overnight. Brent crude futures rose 51 cents, or 0.6 per cent, to $83.74 a barrel. Industry officials in Asia and Europe cautioned that restoring confidence in shipping through the Strait of Hormuz could take several weeks despite the peace agreement.
Investor sentiment received a boost after US President Donald Trump announced a deal with Iran, though analysts warned that the agreement could still face challenges, particularly due to differences involving Israel and unresolved issues surrounding Iran’s nuclear programme.
“While it is an important diplomatic breakthrough that should remove a key source of market volatility, the durability of the deal is likely to be tested in the future,” analysts at Westpac said in a research note.
On Wall Street, optimism over the agreement fuelled a broad rally. The S&P 500 climbed 1.7 per cent, while the Nasdaq Composite surged 3.1 per cent. The Dow Jones Industrial Average and Europe’s STOXX 600 index also ended at record highs.
Investors are now closely watching central bank meetings, particularly that of the Bank of Japan, which is widely expected to raise interest rates to their highest level in 31 years.
Deputy Governor Shinichi Uchida is scheduled to address the media following the policy announcement, as Governor Kazuo Ueda is undergoing medical treatment and will not attend.
Analysts at Mitsubishi UFJ said they do not expect significant changes in the central bank’s assessment of economic conditions and believe Uchida’s comments will largely reflect Ueda’s recent policy guidance.
Attention is also on the Reserve Bank of Australia, which is expected to keep interest rates unchanged, according to economists surveyed by Reuters.
In currency markets, the US dollar index remained largely unchanged at 99.66, continuing to trade within a narrow range.
The yield on the benchmark US 10-year Treasury bond rose 0.8 basis points to 4.475 per cent.
Gold prices gained 0.2 per cent to $4,313.87 an ounce.
In the cryptocurrency market, Bitcoin slipped 0.3 per cent to $66,245.97, while Ether fell 1.2 per cent to $1,793.70.