In a long-awaited move, the Bank of Japan ended its negative interest rate policy after eight years, marking a historic shift away from its ultra-loose monetary stance. This move, along with abandoning yield curve control and stopping purchases of risky assets like ETFs, ushered in the end of Japan's era of cheap money. The yen weakened right after, and Japanese government bond yields fell in reaction to the policy pivot. Major Japanese banks like Mizuho Financial Group and Sumitomo Mitsui Financial Group plan to raise interest rates on ordinary yen deposits for the first time since 2007, viewing the end of negative rates as positive for their interest income.
EQUITY
Heavyweight Asian tech stocks with exposure to AI fell on Tuesday, tracking aftermarket losses in Nvidia after the chipmaker unveiled its Blackwell AI chips but gave no pricing details. While the new chips were expected, the lack of clarity on pricing coupled with an element of profit-taking and a diminished risk appetite ahead of key central bank meetings weighed on bubbling tech valuations. However, reports of Apple's talks to use Alphabet's Gemini AI for iPhones, Tesla's EV price hike in Europe, and sale speculation around Hashicorp provided some counterbalance.
GOLD
Gold prices stayed range-bound around $2,155 on Tuesday as investors avoided making significant moves ahead of the U.S. Federal Reserve policy decision this week. With the Fed widely expected to keep interest rates unchanged, clues on the potential timing of rate cuts later this year are closely monitored, as strong inflation data has led speculators to scale back bets on early cuts. Market trends point towards price weakness ahead, with three lower highs.
OIL
Crude oil jumped almost 2% on Monday but fluctuated near its multi-month highs on Tuesday as reports of lower exports from Saudi Arabia and Iraq suggested tighter markets, though concerns over Russian supply and jet fuel demand limited gains. Traders awaited the Federal Reserve's interest rate decision and economic data releases for clarity on the demand outlook, while the U.S. pledged to replenish its Strategic Petroleum Reserve to pre-sale levels two years ago by year-end.
CURRENCY
The yen tumbled in a long-awaited Bank of Japan's historic shift to end its negative interest rate policy and decades of massive monetary stimulus. The yen weakened past 150 against the dollar as investors already priced in the policy pivot, although uncertain of the duration or consequences in the next few months. Elsewhere, the Australian dollar slid after the Reserve Bank of Australia left rates, while the greenback continued its rise for the fourth session.
