(Bloomberg) — Stocks in Asia were poised to follow the rally in U.S. stocks on Thursday, with firm signs that the Federal Reserve will soon cut interest rates. Japan was an exception as stock futures fell to reflect a stronger yen.
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Australian and Hong Kong stock futures rose after the S&P 500 and Nasdaq 100 rose, helped by strong gains from big technology companies that extended into late trading. rose 13% during the main session, while Meta Platforms Inc. rose about 5% in post-market trading after beating sales forecasts. US stock contracts advanced in early Asian trading.
Wall Street’s gains were driven by signs the Fed will cut rates after leaving borrowing costs unchanged at its meeting on Wednesday. Notably, the commission went on to say that it is “mindful of the risks on both sides of its dual mandate,” rather than a previous formulation focusing solely on inflation. At a press conference, Fed Chairman Jerome Powell said officials could cut rates “as early as” September.
“It will certainly be a double reward day for the Asian market,” said Hebe Chen, analyst at IG Markets. “The certainty of a rate cut in September, in the most targeted way ever, will dispel any lingering concerns and instill the most confidence seen in months among market participants,” while worries about the technology sector will likely dissipate, she said.
Australian and New Zealand yields fell on Thursday morning, tracking a Wednesday rebound in Treasuries across the curve. The US 10-year bond yield fell 11 basis points on the session to 4.03%, a level not seen since February. US debt gains also reflected reports that Iran ordered retaliation against Israel for the assassination of a Hamas leader on its territory. An index of dollar strength had its worst day since May.
The drop in US yields added more fuel for a yen rally. The Japanese currency remained stable in early Thursday trading after falling below 150 per dollar on Wednesday, a level not seen since March, after the Bank of Japan raised rates and announced plans to cut purchases. of titles.
In Asia, economic data due out on Thursday includes Australian trade, Indonesian inflation and China’s July Caixin manufacturing PMI.
In commodities, West Texas Intermediate rose on Thursday morning to add to its 4.3% advance on Wednesday, the biggest daily jump in more than two years. Gold remained stable after rising on Wednesday.
Federal Reserve
The changes to the Fed’s statement solidify a shift in tone among several policymakers, including Powell, acknowledging growing risks to the job market. They are also likely to reinforce expectations among economists and investors regarding a rate cut at the central bank meeting on 17-18 September.
“Powell wants to say today ‘let’s do this’ – but at the same time, he knows he doesn’t need to commit just yet before he gets more time and data,” said Peter Boockvar in the Boock Report.
Given that markets were already fully priced in for a cut in September, neither the Fed’s statement nor Powell’s remarks drastically changed the trajectory of rates in the bond market, according to Tiffany Wilding of Pacific Investment Management Co.
Interest rate swaps showed that traders are still fully priced in a quarter-point cut in September – and total value reductions of almost 70 basis points for the year.
“The data has moved in Powell’s direction and now he is preparing to follow,” said TradeStation’s David Russell. “Jobs data on Friday and CPI in two weeks are the next big things. If all goes well, we may receive clearer messages from Powell in Jackson Hole in late August.”
Main events this week:
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Eurozone S&P Global Eurozone Manufacturing PMI, Unemployment, Thursday
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U.S. Initial Jobless Claims, ISM Manufacturing, Thursday
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Amazon, Apple Earnings, Thursday
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Bank of England Rate Decision Thursday
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US employment, factory orders, Friday
Some of the main movements in the markets:
Actions
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S&P 500 futures were up 0.5% at 8:30 a.m. Tokyo time
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Hang Seng futures rose 0.2%
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S&P/ASX 200 futures rose 0.2%
Coins
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The Bloomberg Dollar Spot index was little changed
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The euro was little changed at $1.0824
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The Japanese yen remained little changed at 149.99 per dollar
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The offshore yuan was little changed at 7.2261 per dollar
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The Australian dollar was little changed at $0.6546
Cryptocurrencies
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Bitcoin rose 0.2% to $64,716.18
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Ether rose 0.6% to $3,239.37
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This story was produced with help from Bloomberg Automation.
–With help from Winnie Hsu.
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