Rise in Asian Markets Following Wall Street Rally
(Bloomberg) — Asian equities are poised for an uptick after a surge on Wall Street, as Jerome Powell eased the anxieties of investors concerned about tariffs, indicating that the Federal Reserve believes no immediate drastic measures are necessary due to Donald Trump’s trade war.
Stock Futures and Economic Indicators
Futures for Japanese and Australian stocks increased following a 1.1% rise in the S&P 500 and a 1.3% gain in the Nasdaq 100 on Wednesday. Meanwhile, Hong Kong futures remained relatively stable after a 0.4% drop in a measure of US-listed Chinese stocks, hinting at a potential decline in China’s strong performance against US stocks this year. US equity futures also rose during early trading hours in Asia.
Treasury Yields and Federal Reserve Stability
On Wednesday, treasuries experienced a sudden shift, with two-year yields falling below 4% and the benchmark 10-year yield decreasing by four basis points to 4.24%. Meanwhile, the dollar index saw an increase.
Market Reaction to Fed’s Policy and Growth Outlook
The Federal Reserve maintained its monetary policy, as anticipated, with Powell cautiously discussing how presidential actions might influence the economy. He suggested that the effects of tariffs on inflation could be “transitory.” The stocks’ rally, which was the most significant on a Fed day since July, followed a challenging four-week period during which the S&P 500 went into correction territory.
Analyst Insights on Market Dynamics
Christian Hoffmann from Thornburg Investment Management noted, “The market will interpret this as slightly dovish, as the Fed doesn’t seem unduly concerned about the economy or inflation. Both stocks and bonds benefited from this sentiment.” Despite Fed forecasts indicating some bearish trends, like lowered growth prospects for 2025 and a revised inflation estimate, the stock correction had already considered a challenging economic environment.
Upcoming Economic Data in Asia
Japanese data due for release includes Loan Prime Rates in China for one year and five years, unemployment figures in Australia, inflation rates in Hong Kong, and a rate decision from Taiwan. The Bank of England is predicted to maintain unchanged interest rates, whereas the Swiss National Bank is expected to reduce rates by 25 basis points to 0.25% as per consensus forecasts.
Corporate Developments and Market Predictions
Tencent Holdings Ltd. announced substantial plans to increase spending on AI infrastructure following its fastest revenue growth since 2023. In response to shareholder feedback, Samsung Electronics Co. committed to bolstering its position in the high-bandwidth memory chip sector. Fed Chair Powell’s measured comments regarding recession risk gave reassurance to investors, and the Fed’s decision to slow down the pace of balance sheet reduction further contributed to a bullish bond market. Oil prices rose after a government report eased fears about immediate demand drop, while gold reached new highs amid the Fed’s forecast of reduced growth and increased inflation.
Market Movements Summary
Here are some key market movements:
- Nikkei 225 futures increased by 0.3% as of 7:21 a.m. Tokyo time
- Hang Seng futures remained largely unchanged
- S&P/ASX 200 futures went up by 0.7%
- S&P 500 futures rose by 0.2%
