Asian Stocks Trade in Narrow Ranges Amid Interest Rate Concerns and Currency Volatility

Asian stocks traded in narrow ranges on Wednesday following a recent rout that nearly wiped out the year’s gains. The focus was on currencies as traders prepared for higher interest rates in the US.

The dollar slightly weakened against most major currencies after a strong five-day gain, putting pressure on emerging-market currencies. South Korea’s won rebounded after breaching a key level, while the Philippine peso weakened and Indonesia’s rupiah continued to decline despite central bank intervention.

Market experts are now pricing in potential rate cuts by the Federal Reserve later this year, causing the dollar to strengthen and creating headwinds for Asian markets. MSCI’s Asia Pacific Index saw a slight increase after earlier dropping amid concerns about higher rates and geopolitical tensions.

Equity benchmarks in Japan and South Korea fell, while shares in mainland China rose as regulators tried to ease worries about new stock exchange rules. Treasury yields remained stable after reaching 2024 highs, following comments from Federal Reserve chief Jerome Powell about inflation.

Traders, who initially expected multiple rate cuts this year, are now skeptical about any reductions. Fed officials have expressed differing views on inflation and interest rates, contributing to market uncertainty.

Elsewhere, New Zealand saw persistent home-grown price pressures in the first quarter, while oil prices dipped as traders awaited Israel’s response to Iran’s recent attack. Gold remained near a record-high.

Key events this week include Eurozone CPI data, speeches from Fed officials, and earnings reports from companies like Taiwan Semiconductor. Overall, market movements were mixed, with some stocks rising and others falling, and currencies fluctuating against the dollar.

This story was produced with the assistance of Bloomberg Automation, and it reflects the ongoing volatility and uncertainty in global markets.