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Most Asian markets experienced declines On Tuesday, as investors awaited the Federal Reserve's policy decision and US inflation data.
The euro continued to struggle to rebound from a recent sell-off driven by political uncertainty in Europe.
Despite Wall Street's three main indexes reaching new highs on Monday, Asian investors were less confident following a lackluster performance in thin holiday trading the day before.
Hong Kong, Shanghai, and Sydney all saw declines after an extended weekend break, while Singapore, Taipei, Manila, and Jakarta also experienced losses.
On the other hand, Tokyo, Seoul, Bangkok, and Mumbai all saw slight increases.
Traders did not seem affected by the new appeals from Chinese officials to address the oversupply of housing in the country, as they continue to grapple with the substantial debt in the property sector.
In other news, a Hong Kong court reportedly mandated the liquidation of Chinese developer Dexin on Tuesday, marking the latest company to face such a directive.
The euro continued to face pressure against other currencies due to increasing political uncertainty following French President Emmanuel Macron's decision to call for a snap parliamentary election in response to strong support for the far-right in EU elections.
This move was accompanied by a significant setback for centrist parties in Spain, Germany, the Netherlands, Italy, and Austria. Despite a drop on Monday, stock markets in Paris and Frankfurt rebounded, with London also experiencing an increase.
Oil prices declined after a previous rally as traders awaited the release of an OPEC report outlining demand forecasts.
These gains came after a recent decline in oil prices, which was prompted by an announcement from OPEC and other producers about reversing recent production cuts.
However, officials from the organization reassured markets that they could change their decision if necessary. Despite positive economic indicators last week, Friday's non-farm jobs report indicated that interest rates may remain high for some time.
There has been speculation about potential interest rate cuts by the Fed, with some officials expressing reluctance to act too quickly out of concern for reigniting inflation, which has remained persistently above target.
The focus is now on the upcoming policy meeting and the release of May's consumer price index, which decreased in April after three consecutive above-forecast readings. While it is expected that borrowing costs will remain unchanged, the key point of interest is the "dot plot" forecast for future interest rates.
At the beginning of the year, traders anticipated up to six rate cuts, but they have reduced their expectations since then.
The most optimistic prediction now is for three cuts, and some are even considering the possibility of no cuts at all.
Saxo's Charu Chanana stated, "Although April's inflation was lower than expected, leading to renewed talks of rate cuts, we believe that one month of data is not enough to establish a trend.
The focus now is on the May inflation data to confirm that disinflation is advancing and to provide the Fed with the confidence to implement rate cuts this year."
