Asia stocks soar on assumptions of rate cuts. European stocks to open higher

Tuesday saw Asian equities reach 15-month highs as investors became more optimistic about U.S. interest rate reduction; the dollar was held stable by a declining yen and a little decline in the Australian dollar.

As anticipated, Australia's central bank kept interest rates unchanged, but because policymakers did not tighten their advice about the possibility of another rate rise, the Australian currency fell by around 0.4% and the country's stock market gained.

The Hang Seng in Hong Kong was expected to end a 10-day winning run with a 0.9% loss, despite rising markets in Taiwan and South Korea.

With gains of 1.2% and 1.9%, respectively, Japan's Nikkei 225 and South Korea's KOSPI were the top performers in Asia on Tuesday.

Following a busy weekend, the two gained ground in catch-up trade, with their gains primarily stemming from Friday's lower-than-expected U.S. nonfarm payrolls data. The largest gains for the two indices came from technology stocks.

The payroll report released on Friday was a major source of encouragement for Asian markets, as traders started to factor in future interest rate reductions from the Federal Reserve. The probability of a 25 basis point rate reduction by the Fed in September is 48%, according to traders.

Tuesday's gains in other Asian markets were more restrained, particularly after Federal Reserve officials issued a warning that even though the central bank will eventually lower rates this year, further evidence of declining inflation was still needed. This week, there will also be more Fed speakers.

Pretty quiet today on the economic front, with the main event being the construction PMI data for the UK. BP has already reported its earnings, missing expectations and future guidance due to lower oil and gas prices. Eyes are also on Walt Disney, the media conglomerate is expected to report earnings in the pre-market session where investors will be closely watching the streaming figures and future guidance.

(Sources: investing.com, reuters.com)