Asian stocks paused on Thursday, hovering near their highest levels in two years as traders awaited further U.S. policy signals. Sterling held steady ahead of a Bank of England meeting where interest rates are expected to remain unchanged.
In addition to the BoE, investor focus shifted to central bank decisions in Switzerland and Norway, expected to influence the global interest rate outlook.
MSCI's broadest index of Asia-Pacific shares outside Japan showed little movement at 572.97, close to Wednesday's two-year peak of 573.38, buoyed by gains in the tech sector. The index is poised for a 4% gain in June.
Japan's Nikkei slipped 0.63%, while Chinese stocks also edged lower, with the blue-chip index down 0.34%. Hong Kong's Hang Seng index declined by 0.14%.
China maintained its benchmark lending rates unchanged at a monthly fixing on Thursday, meeting market expectations despite ongoing concerns about economic stability.
The onshore yuan weakened beyond 7.26 per dollar for the first time since November.
The pound traded at $1.2717 ahead of the BoE's policy decision, marking a 0.2% decline in June.
Data released Wednesday indicated British inflation had returned to its 2% target for the first time in nearly three years in May, reducing expectations for an interest rate cut ahead of next month's election.
Most economists polled by Reuters last week anticipated the central bank to begin cutting rates in August. However, market sentiment reflects only a 30% probability of an August rate cut, with expectations leaning towards adjustments in September or November.
Markets have priced in a 43 basis point easing by the BoE this year.
Meanwhile, the Swiss National Bank is widely anticipated to lower its key policy rate by 25 basis points for a second consecutive meeting. Norway's central bank is expected to maintain its key policy interest rate unchanged.
NVIDIA LEADS TECH SURGE
A surge in technology stocks on Tuesday propelled AI chipmaker Nvidia (NASDAQ) past Microsoft (NASDAQ) as the world's most valuable company, triggering a global rally in tech shares.
U.S. markets were closed on Wednesday, but Nasdaq futures indicated a 0.25% gain in early trading on Thursday.
The AI frenzy has driven tech stocks higher this year, with Nvidia leading the charge alongside other major players, boosting U.S. stocks to record highs and spurring gains in Asian markets.
"Nvidia remains pivotal in the global equity landscape," noted Chris Weston, head of research at Pepperstone.
Weston cautioned, however, about weak market breadth and limited participation, suggesting the rally's foundation might be fragile.
"With AI and big tech driving the market and no immediate risks in sight, the path of least resistance appears to be higher equity indices."
On a broader scale, investors await clues on the Federal Reserve's timeline for initiating a policy easing cycle, following its projection of a single rate cut this year last week, amid cautious statements from policymakers this week.
The dollar index, which gauges the U.S. dollar against six major peers, held steady at 105.23, while the euro traded unchanged at $1.0746.
The Japanese yen traded at 158.05 per dollar, pressured by the substantial interest rate differential between Japan and the United States. The yen has depreciated over 10% against the dollar this year.
Stefan Hofer, chief investment strategist at LGT Bank Asia, suggested, "The optimal scenario could be a Fed interest rate cut in September, narrowing the yield gap between the dollar and the yen."
"We anticipate the Bank of Japan will gradually tighten monetary policy, although significant room for aggressive rate hikes may be limited," Hofer added.
In commodities, oil prices showed mixed movements, with Brent holding steady at $85.08 per barrel, while U.S. West Texas Intermediate crude for June edged 0.18% lower to $81.42 per barrel.
Paraphrasing text from "Reuters" all rights reserved by the original author.
