Asian Markets Stagnate Amid Fed Bets, Iran Comments, and AI Shifts
Asian markets traded in a holding pattern on Tuesday as investors weighed various factors. The US Federal Reserve's interest-rate expectations, President Donald Trump's comments on Iran, and Societe Generale's warning about artificial intelligence (AI) were among the key considerations.
The yen continued to strengthen against the dollar after coordinated intervention by US and Japanese authorities last week. The dollar rose 0.3% against the yen to 157.62, but the yen remains about 4% stronger than it was a week ago before the intervention.
Market pricing suggests that there's a 65% probability of a 25-basis-point increase in US interest rates at the Federal Reserve's next meeting on September 16. This comes after data showed US manufacturing activity reached its highest level in over four years in July, contributing to a record close for the Dow Jones Industrial Average overnight.
Societe Generale analysts characterized the AI trade as entering a mature phase, pointing to falling earnings expectations among South Korean technology stocks and shifting investor focus toward margin sustainability beyond 2026. However, Eastspring Investments' Chief Investment Officer Vis Nayar took a different view, stating that recent Big Tech earnings show the AI capital expenditure cycle remains firmly in place.
Oil prices experienced limited gains, with Brent crude rising 1.6% to $85.12 a barrel after attacks on shipping in the Strait of Hormuz. Bitcoin was flat at $63,776.56, while ether slipped 0.3% to $1,862.40.