Asian stocks climbed following a strong performance on Wall Street, as the Federal Reserve indicated it could still lower interest rates later this year. This reassurance was based on the belief that any inflationary pressures from tariffs would be temporary. The MSCI regional stock benchmark hit its highest point since early November, with notable gains across markets in Taiwan, Australia, and South Korea. U.S. equity futures also rose, with the S&P 500 recording its largest increase on a Fed policy-decision day since July. Japanese markets were closed for a holiday, preventing trading in cash Treasuries in Asia.
Australia’s dollar weakened after jobs data revealed a loss of 52,800 jobs last month, contrary to the expected increase of 30,000. Meanwhile, Treasury futures edged higher in Asia, extending Wednesday’s gains, and copper surged above $10,000 a ton amid the ongoing tariff concerns.
However, Chinese equities bucked the regional upward trend. The CSI 300 Index, representing mainland China stocks, dropped for the first time in three days, with technology stocks leading the decline after their recent rally. The Hang Seng Index in Hong Kong fell as much as 1.7%.
Sundeep Gantori, an analyst at UBS Global Wealth Management in Singapore, told Bloomberg Television that the risk-reward outlook for China was “slightly less reasonable,” while U.S. tech stocks appeared more attractive following recent corrections. Tencent Holdings Ltd. saw its shares decline despite reporting its fastest revenue growth since 2023. In South Korea, Samsung Electronics Co. rose after announcing plans to strengthen its position in the high-bandwidth memory chip market, addressing shareholder concerns.
Data Highlights
Chinese banks kept their one-year and five-year loan prime rates unchanged for the fifth consecutive month. Economic data due for release Thursday includes inflation figures for Hong Kong and a policy decision in Taiwan. Additionally, the Bank of England is expected to keep interest rates unchanged, while the Swiss National Bank is forecast to reduce rates by 25 basis points.
The Federal Reserve held its benchmark rate steady as anticipated, with Chairman Jerome Powell downplaying concerns about the economic impact of tariffs, suggesting their inflationary effects would be “transitory.” This dovish tone helped spur a rally in stocks, following a rough month in which the S&P 500 slipped into a correction.
Christian Hoffmann, a portfolio manager at Thornburg Investment Management, noted that the market interpreted the Fed’s stance as relatively dovish, as it suggested the central bank was not overly concerned about inflation or the economy, which in turn boosted both stocks and bonds.
Despite some adjustments to the Fed’s growth forecasts—reducing expectations for 2025 growth and increasing inflation estimates—stocks still rallied. Powell’s comments on the low risk of a recession further calmed market fears, contributing to optimism.
Oil prices saw a slight uptick after a U.S. government report alleviated concerns about demand destruction, while gold remained relatively flat.
Copper continued its upward momentum, surpassing $10,000 per ton, driven by global trade tensions and the looming threat of tariffs on the industrial metal.
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