According to Bloomberg, Asian stocks are expected to rise on Tuesday, led by Japan's benchmark index. This follows a strong session on Wall Street, where Tokyo equity futures climbed more than 1.5%, with smaller gains observed in Hong Kong and Sydney. The positive sentiment in the US market is driving this upward trend, despite a challenging period for investors during July and August. Investors have shown resilience, continuing to invest in equities as the stock-market relief rally gains momentum.
In Asia, attention will be on the yen's performance. Meanwhile, the Federal Reserve is approaching a critical juncture. Although the Fed is unlikely to adopt a more dovish stance than the market expects, as long as economic growth remains stable, stocks are likely to be supported. Kwon, an analyst, mentioned that while the risk is perceived to be on the upside, there is no expectation of a significant move from Powell, the Fed Chair. However, Powell is not expected to completely dismiss the idea of supporting growth either. He is likely to acknowledge the significant changes in the balance of risks since the June Summary of Economic Projections, suggesting that removing optionality in the current situation would not be prudent.
Dutta, another analyst, believes that the 'Powell Put'—a term referring to the Fed's tendency to support markets during downturns—might make a comeback this week. Recent economic data and earnings reports indicate that while the upside potential is more limited than earlier in the year, there is still considerable room for growth. The team led by analysts at Bloomberg Automation supports this view, noting that the market's upward trajectory, although muted, remains intact.