Asian stocks rise, the dollar strengthens, and bets for a US rate cut shrink

Tuesday saw gains in Asian markets as the dollar strengthened and the yen remained stable around the 152-per-dollar mark, which has traders concerned about potential intervention. This occurred as hopes that the Federal Reserve would soon decrease interest rates began to wane.

According to data released on Monday, the US manufacturing sector expanded in March for the first time in one and a half years as new orders rose and production significantly recovered, underscoring the robustness of the economy and raising questions about when the Fed may drop interest rates.

The strong manufacturing statistics raised U.S. Treasury rates, pushing the two-year and 10-year yields to two-week highs and strengthening the value of the dollar.

Futures suggested a muted opening for European stock markets.

Tuesday saw a slight decline in Chinese equities following their largest daily rise in a month on Monday, as the most recent factory activity data indicated that the nation's economic recovery is gathering momentum.

The first day of the second quarter began quietly for the S&P 500 overnight due to concerns over the timing of interest rate decreases following the release of better-than-expected manufacturing data, which caused Treasury rates to rise. The benchmark U.S. index recorded its largest percentage rise in the first quarter in the last five years.

It is possible that rate reduction will take place if core PCE inflation falls to 2.5%–2.6% by the June meeting, which would make room for some minor weakness. According to Standard Chartered analysts, "The danger is that the Fed fails to agree on reduction, giving US rates and the USD another boost.”

Key Events Today:

- UK Manufacturing PMI due at 09:30 GMT

- German CPI due at 13:00 GMT

- US JOLTs Job Openings due at 15:00 GMT

(Sources: investing.com, reuters.com)