The Bank of Japan maintained its ultra-loose monetary policy that drove the Nikkei to 34-year highs but weakened the yen against a backdrop of rising global interest rates. Broader Asian markets followed suit, combined with a positive lead from Wall Street and continued hype surrounding the tech sector. However, profit-taking later in the day saw Japanese shares retreat from their peak, with the BOJ's lack of concrete tightening plans keeping investors on edge. Tokyo's consumer price index data this week will be crucial for gauging the central bank's next move and its potential impact on both domestic and regional markets.
Wall Street soared to new heights, continued by tech's rally ahead of key earnings reports and economic data. Big names like Netflix and Tesla are set to release earnings this week, while investors await crucial GDP and inflation figures that could influence the Fed's rate decision next month. Despite Boeing facing further FAA scrutiny and Gilead's lung cancer drug setback, the market's optimism remained unshaken, with Macy's rejecting a takeover bid and chip stocks extending their gains.
Gold rebounded on Tuesday ahead of a barrage of central bank decisions and key economic data. While dovish signals from the Bank of Japan and tempered expectations for Fed rate cuts initially supported the metal, the upcoming ECB meeting and US inflation data releases could inject fresh volatility.
Oil prices finally shot up after months of geopolitical storms in the Middle East and more recent production hiccups in the US due to extreme weather, combined with China's sluggish economic recovery and potential demand slowdown that could see relief soon. A bullish close above key moving averages and expectations of falling US inventories hint at further upside in the near term.
The yen hovered near multi-month lows after the Bank of Japan's dovish stance, expecting prolonged monetary divergence with the Fed and pressuring the currency. The dollar remained near recent highs, supported by receding bets for an early Fed pivot and continued resilience in US economic data. The Australian dollar gained traction and the Chinese yuan was buoyed by central bank intervention, while overall sentiment remained muted by the prospect of higher-for-longer US rates.