On Wednesday (June 26th), Asian stock markets rose for the second consecutive day, following the rise of the US stock market, while the Australian dollar rose due to higher than expected inflation data.

Asian stocks up

The stock market indices of Japan and South Korea rose, while the Australian stock market fell. The US futures market stabilized during Asian trading hours, driving up the S&P 500 index after Nvidia's stock price rebounded.

The US dollar rose slightly on Wednesday. Due to the faster than expected inflation rate in Australia in May and the rise of the Australian dollar, it indicates that price pressure remains stubborn, enhancing the reason for the Australian Federal Reserve to resume interest rate hikes.

The Japanese yen is approaching intervention levels

The Japanese yen is hovering at an important psychological level slightly below 160 against the US dollar, and breaking through this level may raise concerns about intervention.

Kyle Rodda, a market analyst at Capital, said, "The risk of events for the entire region is limited today. However, the yen is still close to the 160 mark and the level of market intervention by Japanese authorities."

In Japan, according to another Bloomberg survey, it is expected that the Bank of Japan will raise interest rates in July and release a roadmap for its quantitative tightening path. Traders have indicated that the next major pain point for the Japanese yen - and potential triggers for Japanese intervention - may come from Friday's favored US inflation indicator data by the Federal Reserve.

"The details of finalizing the reduction in bond purchases may not be a constraint on the July interest rate hike," Ayako Fujita, Chief Japan Economist at JPMorgan Securities, wrote in response to the survey. She added, "The cost of delaying the adjustment of excessive monetary easing policy is increasing due to the emergence of upward inflation risks."

Investors may continue to flock to the US stock market

In US market transactions, Nvidia rose by approximately 7% after experiencing a market value decline of $430 billion. In evening trading, FedEx Corp., as a barometer of economic growth, rose about 15% due to optimistic forecasts. In other company news, electric vehicle manufacturer Rivian Automotive Inc. surged due to Volkswagen's $5 billion investment in a joint venture.

According to BNP Paribas, investors may continue to flock to the US stock market as the Federal Reserve approaches interest rate cuts, and the bank is expected to begin its easing cycle early next year.

Due to the bleak business environment, job market, and income prospects, consumer confidence in the United States has declined. Federal Reserve Director Michelle Bowman stated that she believes there are multiple upward risks to the inflation outlook. Her colleague Lisa Cook stated that it would be appropriate to lower interest rates at some point and added that she expects inflation to gradually improve this year.

"We believe that our current bull market will not derail unless we fall into recession or the Federal Reserve shifts its interest rate policy from a possible rate cut to an actual rate hike," said Chris Zaccarelli of the Independent Advisor Alliance. He added, "We expect fluctuations from now until the end of the year, but don't expect the bull market to end without a change in the economy or the Federal Reserve's stance."

UBS stated that Nvidia's recent sell-off does not reflect a deteriorating outlook for technology or the broader market, as other demand signals are positive.

Solita Marcelli, Chief Investment Officer of UBS Global Wealth Management Americas, wrote, "Nvidia's correction should not be mistaken for a warning signal for AI structured investment cases or broader stock prospects."

In other places, before the official government data was released, oil prices remained on a downward trend after industry reports showed a slight increase in US crude oil inventories.