FX.co ★ Asian Shares Mixed As China Trims Repo Rate

Asian stock markets showed mixed performance on Monday following the Federal Reserve's significant 50-basis-point rate cut last week. Trading volumes were notably thin, attributed to a market holiday in Japan.

This week, the spotlight is on several key economic indicators from the United States, including the GDP print, inflation figures, global manufacturing surveys, consumer confidence, and durable goods orders. These data points are crucial for assessing the Federal Reserve's future rate decisions.

Investors are also poised to hear from several Federal Reserve officials, including Chair Jerome Powell, two governors, and New York Fed President John Williams, this week.

Data from CME FedWatch indicates that traders are currently pricing in 75 basis points of rate cuts by the end of the year, with expectations extending to nearly 200 basis points by December 2025.

In Europe, the Swiss National Bank will meet on Thursday, with markets fully anticipating a quarter-point rate cut. Similarly, Sweden's central bank is expected to reduce rates by 25 basis points at its meeting on Wednesday.

The dollar index made marginal gains this morning while gold prices remained steady near record highs following an agreement by U.S. congressional leaders on a short-term spending bill to fund federal agencies for approximately three months.

Oil prices continued to rise, extending last week's 4 percent jump fueled by optimism that lower borrowing costs could bolster global economic growth and demand.

In the Middle East, tensions continued as Israel carried out strikes in Gaza and Lebanon, raising fears of a broader conflict in the region. Hezbollah launched over 100 rockets early Sunday into northern Israel, escalating the situation.

China's Shanghai Composite index inched up 0.2 percent after the central bank's unexpected decision to lower its 14-day repo rate by 10 basis points. However, gains were limited amid reports that the U.S. may propose banning Chinese software and hardware in autonomous vehicles.

Hong Kong's Hang Seng index rose 0.5 percent, approaching a three-month high. South Korea's Kospi index remained largely unchanged, while Australia's S&P/ASX 200 fell 0.7 percent ahead of the Reserve Bank of Australia's policy meeting on Tuesday, where no interest rate changes are anticipated. Over in New Zealand, the S&P/NZX-50 index dropped 0.6 percent.

U.S. stocks ended the previous week on a mixed note, with strong weekly gains following the Federal Reserve's aggressive rate cut. FedEx's earnings outlook downgrade dampened market sentiment slightly. The Dow closed at a record high with marginal gains, while the S&P 500 and Nasdaq Composite slipped 0.2 percent and 0.4 percent, respectively.

European markets also closed lower on Friday after an initial rally spurred by the Fed's significant rate cut. The pan-European STOXX 600 declined by 1.4 percent, with Germany's DAX and France's CAC 40 both losing approximately 1.5 percent, and the U.K.'s FTSE 100 slipping by 1.2 percent.