Asian stock markets experienced an upward trend on Thursday, buoyed by a strong rebound in global technology shares, notably those of Meta and Nvidia. The anticipation of potential policy adjustments by the Federal Reserve further boosted global bond and commodity markets.
The Federal Reserve maintained its current interest rates during its latest meeting but hinted at a possible reduction in September. This development led traders to speculate that the Bank of England might also lower its rates, with a 60% probability of such a move.
The Japanese yen continued its impressive climb, gaining an additional 0.8% to reach a 4.5-month high of 148.82 per dollar, following a 1.8% surge the previous day. This rally came on the heels of the Bank of Japan’s decision to raise interest rates for the second time in 17 years, with indications of further tightening.
In contrast, Japan’s Nikkei index fell by 3% as the strengthening yen negatively impacted the outlook for Japanese exporters.
The MSCI Asia-Pacific Index, excluding Japan, rose by 0.7%, recovering from a mostly flat July. The regional MSCI IT index saw a notable increase of 2.0%, and shares in Taiwan climbed by 1.7%.
Chinese blue-chip stocks dipped by 0.3% following a private survey that revealed an unexpected contraction in China’s manufacturing sector for July, raising concerns about the country’s economic growth.
On Wall Street, technology stocks saw a significant rebound after a recent downturn. Nasdaq futures surged by 1% in Asia as Meta Platforms, the parent company of Facebook, saw a 7% rise in share value following strong earnings results. S&P 500 futures also gained 0.5%.
Earnings reports from Apple and Amazon.com are anticipated later in the day, while Nvidia’s stock surged, adding approximately $330 billion in market value on Wednesday.
Global risk appetite was further supported by dovish remarks from Fed Chair Jerome Powell, who indicated that a rate cut was discussed during the July meeting. The Fed also noted that employment risks are now comparable to inflationary concerns.
As markets anticipate a potential rate cut in September, some are even speculating on a 10% chance of a 50 basis point reduction. Analysts at TD Securities suggested that the Federal Open Market Committee (FOMC) might ease policy in upcoming meetings, depending on inflation trends.
U.S. Treasury yields rose, with the 10-year yield climbing by 2 basis points to 4.037%, despite a drop of 11 basis points overnight.
The dollar’s decline against the yen contributed to its broader depreciation against other major currencies, with the dollar index slipping by 0.2% to 103.87.
In commodity markets, oil prices extended their recent gains due to heightened geopolitical tensions following the killing of a Hamas leader in Iran. Brent crude futures increased by 0.7% to $81.44 per barrel, while U.S. West Texas Intermediate crude futures rose by 0.9% to $78.61 per barrel, both up around 4% from the previous session.
Gold prices also saw a rise, gaining 0.4% to $2,456.59 per ounce.
