Asian equities rise as Trump’s visa crackdown impacts the market mood
Asian stocks experienced a slight increase, and the dollar remained stable on Monday as traders contemplated the trajectory of US monetary policy following the Federal Reserve’s rate cut last week. Meanwhile, President Donald Trump’s immigration crackdown on worker visas tempered overall sentiment. The emphasis will be on Indian and tech stocks following the announcement from the Trump administration on Friday, which stated it would require companies to pay $100,000 annually for new H-1B worker visas. This move poses a significant challenge to the tech sector that depends heavily on skilled labor from India and China.
US stock futures showed a slight decline in early trading, with the S&P futures down 0.1 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan increased by 0.09 per cent. Tokyo’s Nikkei increased by 1 per cent following a decline on Friday. India’s $283 billion information technology sector, which derives over half of its revenue from the US, is expected to experience challenges in the near term due to deteriorating relations between India and the United States. Last month, Trump increased tariffs on imports from India to as high as 50 percent, a decision influenced in part by New Delhi’s acquisitions of Russian oil. “First of all, it’s a risk to operating costs and margins. Obviously it could raise wages and labour costs a bit,” said Kyle Rodda. “Tech companies may also find themselves in a bind where they confront punitive measures if they look to offshore labor because they can’t find enough workers in the US.” On the macroeconomic front, investors are eager to assess the trajectory of US monetary policy following the Fed’s recent interest rate cut, which suggested a gradual easing phase ahead.
A number of policymakers are anticipated to address the public this week, while data regarding the Fed’s favored measure of inflation is set to be released on Friday, which will influence the near-term rate outlook. The core PCE price index is anticipated to increase by 0.2 per cent on a monthly basis, maintaining the annual rate at 2.9 per cent, consistent with July’s figures, and above the 2.6 per cent low recorded in April, as noted by Tony Sycamore. Traders are anticipating 44 basis points of easing by the end of the year. The dollar remains on an upward trajectory for the time being. The dollar index, which assesses the US currency in relation to six other currencies, stood at 97.716. “The trajectory of the USD is less clear-cut, and where the greenback trades in the near-term is the subject of increased debate. One needs to be open-minded to the idea that the positive USD price action seen late last week could build,” said Chris Weston. “With a significant influx of Treasury supply hitting the market this week and an extensive schedule of Fed speakers, Treasury yields may influence USD flows.”
The Japanese yen experienced a slight decline, trading at 148.20 per US dollar, after a period of strengthening on Friday. This shift followed the Bank of Japan’s hawkish stance, where two board members opposed the decision to maintain steady interest rates. Despite the central bank maintaining short-term interest rates at 0.5 per cent, board members Hajime Takata and Naoki Tamura put forth a proposal for an increase to 0.75 per cent, which was ultimately unsuccessful. This move was interpreted by markets as a potential precursor to a forthcoming rise in borrowing costs. Vasu Menon, managing director of investment strategy at OCBC Bank, remarked that Friday’s decision will be interpreted by markets as an indication that the Japanese central bank is slowly adopting a hawkish stance.
It raises “expectations of future rate increases and the potential for higher JGB yields and a stronger yen, which may not be the best piece of news for Japanese equities and bonds in the short term,” he said. In commodities, oil prices saw a slight increase in early trading, with Brent crude futures rising 0.3 percent to $66.89 a barrel. US West Texas Intermediate futures increased by 0.35 percent, reaching $62.9. Gold prices increased by 0.24 percent, reaching $3,692.79 per ounce, approaching the record high achieved last week.
