(Bloomberg) — Asian markets are expected to advance following a bullish session on Wall Street, as Jerome Powell reassured investors wary of tariffs, indicating that the Federal Reserve does not see an urgent need for significant measures amidst Donald Trump’s trade conflicts.
Australian stocks posted gains, mirroring the rise in US equity futures after the S&P 500 increased by 1.1% on Wednesday and the Nasdaq 100 saw a 1.3% boost. Meanwhile, Hong Kong futures remained stable despite a 0.4% drop in a benchmark tracking US-listed Chinese shares, suggesting that China’s performance against US stocks may be losing momentum this year. Tokyo’s markets are closed for a public holiday.
Treasuries experienced a notable shift with two-year yields dropping below 4%, while the benchmark 10-year yield decreased by four basis points to 4.24%. Concurrently, the dollar index saw an uptick.
The Federal Reserve maintained its monetary policy, as anticipated, with Powell taking a moderate stance regarding the potential impacts of the president’s policies on the economy. He suggested that the effects of tariffs on inflation could be “transitory.” The surge in stocks marked the most significant increase on a Fed meeting day since July, following a challenging month where the S&P 500 slipped into correction territory.
“The market interprets this as relatively dovish, considering that the Fed isn’t overly worried about the economy or inflation. Consequently, stocks and bonds are celebrating,” noted Christian Hoffmann from Thornburg Investment Management.
Despite the Fed’s revised forecasts being potentially bearish for equities, including a downgrade in growth projections for 2025 and a heightened inflation estimate, stock markets rallied. Amanda Lynam, BlackRock Financial Management’s head of macro credit research, stated that much of this decline had already been factored into the market, given the previous turbulent weeks in equities. “A lot of that was baked in,” she explained during an interview on Bloomberg Television.
In Asia, upcoming economic data will include China’s one-year and five-year Loan Prime Rates, Australian unemployment figures, inflation data from Hong Kong, and a rate decision from Taiwan. Additionally, the Bank of England is expected to maintain current interest rates, while forecasts suggest the Swiss National Bank may reduce rates by 25 basis points to 0.25%.
In related corporate news, Tencent Holdings has announced plans to significantly increase investments in AI infrastructure following its fastest revenue growth since 2023, while Samsung Electronics aims to enhance its position in the high-bandwidth memory chip sector in response to shareholder feedback.
Overall, Powell’s measured approach to recession risks—indicating that they are “not high”—has eased concerns among stock market participants. The Fed’s revision of growth projections has also fueled the bond market rally, aligning market expectations with the Fed’s rate-cut outlook for the year.
Oil prices increased on Wednesday as a US government report alleviated fears regarding immediate demand destruction, while gold reached new highs amid the Fed’s outlook for moderated growth and increased inflation.
