Asian markets fluctuate ahead of key earnings and Powell

HONG KONG, China — Asian investors trod carefully Tuesday after the latest bounce in optimism fueled by hopes Federal Reserve boss Jerome Powell will signal an interest rate cut in a highly anticipated speech to top central bankers this week.

With recent data indicating the US economy remains in good shape as inflation slows and the labour market softens, there is widespread expectation the bank will finally start unwinding its long-running programme of tight monetary policy next month.

A slew of earnings from US stores Target, Lowe's and TJX are also on tap this week, providing more insight into the confidence of consumers after reassuring retail sales figures last week.

But the main focus is Powell's remarks to the annual symposium of world central bank leaders and financiers at Jackson Hole, Wyoming, which is seen as a possible launchpad for the Fed's rate-cut cycle.

Bets have surged that officials will cut rates 25 basis points next month -- with some even flagging 50 points -- followed by two more before the end of the year.

Powell raised hopes for a move at the bank's most recent meeting when he said it could come "as soon as" September, having previously said the policy board did not need to wait for inflation to fall to its two percent target before reducing rates.

"All eyes and ears are tuned in, eagerly waiting to see if he’ll give a wink of confirmation to the current market pricing," said independent analyst Stephen Innes.

"The market is positioning his remarks to be more consequential than usual, hoping for a dovish signal that sets the stage for the (policy board) to cut in September," he said in his Dark Side Of The Boom newsletter.

However, he added: "But don’t expect Powell to spill the entire rate-cut enchilada just yet. With one more non-farm payrolls report to navigate, the decision between a 25 or 50 basis point cut in September is still up in the air, poised to be the opening act in a multi-rate-cut storyline."

Two top Fed players provided support for a cut.

San Francisco Fed chief Mary Daly told the Financial Times she had "more confidence" inflation is being tamed following recent data.

Her colleague at the Minneapolis Fed, Neel Kashkari,