Asian markets slowed by lower expectations for aggressive Fed rate cut

TOKYO (Reuters) – Asian stocks struggled to rebound on Tuesday, as investors reacted to a sharp drop by the Federal Reserve, which is forecasting a sharp cut in interest rates in the end. of the month of July.

These opinions were strengthened after solid job gains in the US in June and pushed Wall Street for the second day in a row.

The largest MSCI index, composed of Asian equities outside Japan, rose 0.1% at the beginning of the session, following a 0.6% drop the day before. Japan's Nikkei gained 0.5%, partly due to the yen's decline against the dollar.

On Wall Street, the S & P 500 lost 0.48%, while the Nasdaq Composite lost 0.78%, led by the decline of Apple Inc.

Forward market <0#FF:> still take full account of a 25 basis point cut at the next Fed meeting on July 30-31, but almost canceled the price of a larger 50 basis point cut.

"Payroll figures were pretty solid, but wages were lukewarm. Overall, a reduction of 25 basis points would be justified as a precaution and I think the current pricing of the market is fair, "said Naoya Oshikubo, chief economist Sumitomo Mitsui Trust Asset Management.

Investors are now focusing on the testimony of Fed Chairman Jerome Powell before Congress later in the week, looking for clues about monetary policy.

On the forex market, declining expectations of aggressive easing on the part of the Fed have helped the dollar.

The euro traded at $ 1.1215, near Monday's low, at $ 1.207, its lowest level since June 19.

The dollar changed hands at 108.75 yen, after reaching 108.81 yen in the previous session, its highest level for more than a month.

The pound sterling is set at 1.2518, not far from the six-month low of $ 1.2481 touched on Friday.

Oil prices fell slightly in the face of worries about whether the slowdown in world economic growth would have an impact on oil demand eased tensions on the Iranian nuclear program.

Brent crude futures dropped 23 cents, or 0.36%, to $ 63.88 a barrel. West Texas Intermediate (WTI) crude oil futures contracts sold 19 cents or 0.33% to settle at $ 57.47 per barrel.