Asian Markets Gain as Wall Street Rallies, Fed Signals Potential Rate Cuts
Easy Trading Tips – Asian shares edged higher on Thursday, following a strong rally on Wall Street. Investor confidence received a boost from expectations that the Federal Reserve might still implement two interest rate cuts before the end of the year. However, gains remained subdued due to a pullback in Chinese equities.
As widely anticipated, the Federal Reserve left interest rates unchanged on Wednesday. Despite revising its inflation forecast upwards and lowering its economic growth outlook—citing risks associated with U.S. President Donald Trump’s tariff policies—the Fed reaffirmed its expectation for two quarter-point rate cuts this year.
Investors found reassurance in the Fed’s “dot plot” of policy rate projections and Chair Jerome Powell’s comments that inflationary pressures caused by tariffs were likely to be short-lived. As a result, U.S. stocks climbed, while Treasury yields and the dollar weakened.
Global Market Reactions
Australian stocks surged by 1%, while U.S. futures extended gains after the strong cash session close. Nasdaq futures advanced by 0.62%, and S&P 500 futures climbed 0.46%.
In contrast, European stocks appeared set for a weaker opening, with EUROSTOXX 50 futures down 0.07% and FTSE futures easing 0.15%. Trading volume was lighter due to a market holiday in Japan, though Nikkei futures edged up 0.3%.
Kerry Craig, Global Market Strategist at J.P. Morgan Asset Management, noted that the Fed’s easing bias remains intact. He emphasized that the Fed continues to weigh weaker forward-looking consumer and business sentiment against strong backward-looking data, such as resilient labor market figures.
“The Fed doesn’t have all the answers but faces numerous questions about how it interprets economic shifts and policy impacts,” he said. “For now, markets seem reassured that the Fed is ready to act if necessary.”
Gold prices continued their record-breaking run, reaching an all-time high of $3,057.21 per ounce, supported by expectations of Fed rate cuts. [GOL/]
Currency and Bond Market Movements
Trading in cash U.S. Treasuries was closed due to the Japan holiday, but futures edged higher, implying lower yields. As bond prices rise, yields typically decline. [US/]
The dollar weakened, falling 0.18% against the yen to 148.40. Meanwhile, the euro hovered near a five-month high at $1.0893, and the British pound hit a four-month peak at $1.3015 ahead of the Bank of England’s policy decision later in the day.
“We expect Monetary Policy Committee members to emphasize the need for further disinflation before adjusting rates. While the direction remains towards easing, the timing will depend on economic data,” ANZ analysts noted.
China’s Market Struggles
Despite the positive sentiment, the broader Asian market struggled to sustain momentum. MSCI’s index of Asia-Pacific shares outside Japan rose just 0.2%, weighed down by losses in Chinese stocks.
China’s major indexes opened lower, with the CSI300 blue-chip index down 0.63% and the Shanghai Composite slipping 0.3%. Hong Kong’s Hang Seng Index dropped about 1.5%.
Gary Ng, Senior Economist at Natixis, suggested that the decline might be attributed to profit-taking after recent strong rallies. “The market may have priced in all the good news regarding DeepSeek and stimulus measures. Now, sustained gains will depend on tangible economic improvements and corporate profits,” he said.
On Thursday, Beijing left its benchmark lending rates unchanged for the fifth consecutive month, aligning with market expectations.
The yuan remained under pressure due to China’s wide interest rate gap with the U.S. In the onshore market, the yuan slipped 0.06% to 7.2354 per dollar, while offshore rates declined 0.1% to 7.2383 per dollar.
Economic Data from Australia and New Zealand
Australian employment unexpectedly declined in February, ending a series of strong job gains. However, the unemployment rate remained low. The Australian dollar responded by slipping 0.32% to $0.6337.
Across the Tasman Sea, New Zealand’s economy grew faster than anticipated in the fourth quarter, officially exiting recession. Nevertheless, the New Zealand dollar fell 0.53% to $0.5786.
Commodities and Oil Prices
Oil prices edged higher, driven in part by escalating geopolitical tensions in the Middle East. Brent crude futures climbed 0.54% to $71.16 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 0.54% to $67.52 per barrel. [O/R]