(Bloomberg) — Asian stocks rose after U.S. stocks, bonds and commodities rose as the Federal Reserve cut interest rates.
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Australian, South Korean and Chinese shares all advanced, supporting a second day of gains for the region-wide equity gauge. That was after the S&P 500 rose 0.7% and the Nasdaq 100 rose 1.5%, both hitting new highs. Treasuries fell in Asia while US stock futures were little changed.
Investors are shifting their focus from the Federal Reserve to China, where lawmakers are expected to approve a fiscal package worth trillions of yuan, potentially offsetting the impact of potential US trade tariffs under Donald Trump.
Such measures could include supporting local government debt and consumer spending, according to Michel Lam, senior China economist at Société Générale. She said that any new policies must be balanced with the possibility of potential tariffs, noting that the 60% tariffs proposed by Trump may fail to materialize.
“We have a lot of uncertainty about US tariffs,” Lam said. “We may see some smaller tariff increases of about 15% to 20%, which is more reasonable” for the Chinese economy to absorb, she said.
The multi-asset rally on Thursday was helped by comments from Federal Reserve Chairman Jerome Powell who pointed to the strength of the US economy and said he did not rule out a rate cut in December. Powell added that the elections would not have any impact on politics in the near term, and said that he would not step down if Trump asked him to do so.
“Powell and Co. reminded investors of the strong economic foundation on which the United States continues to stand,” said eToro’s Brett Kenwell. “Powell will not reveal whether the Fed is likely to cut interest rates in December, which should not surprise investors. However, the Fed appears more comfortable with the current US labor market and economic backdrop than it was a few months ago.
Elsewhere in Asia, Nissan Motor shares fell as much as 10% in Tokyo, touching their lowest levels since October 2020, after the automaker said it would lay off 9,000 workers and cut a fifth of its manufacturing capacity after net income fell in the first half.
Local Chinese banks are joining more high-yield overseas loans to mainland companies as interest rates fall at home amid monetary easing measures. South Korea said it would strengthen its monitoring of financial markets and respond “actively” to mitigate any excessive volatility.
The Bloomberg Asia Dollar Index rose after falling 0.8% on Thursday, its worst day since August, as the dollar pared post-election gains. The yen drifted lower after rising 1.1% in the US session before largely erasing its declines against the dollar this week.
The yen is likely to come under pressure against the dollar if the United States tries to contain inflation with higher interest rates, Yuichiro Tamaki, head of the Democratic Party of Japan, told reporters.
Fed officials unanimously cut the federal funds rate by 25 basis points and modified language to note that “labor market conditions have generally deteriorated,” and reiterated that “the unemployment rate has risen but remains low.” The statement removed the reference to “further” progress in inflation, noting that inflation “made progress towards the committee’s 2% target but remains moderately high.”
Bloomberg’s gauge of “Magnificent Seven” Megacaps added 2.3%. Lyft Inc stock jumped. By 23% after the passenger transportation services company gave optimistic forecasts. The closely watched banking index fell 2.7% after rising more than 10% in the previous session. JPMorgan Chase & Co. stock fell 4.3% after analysts downgraded it.
Gold pared some of its advance since Thursday, while oil headed for weekly gains. Bitcoin fell for the first time in four days.
Some key movements in the markets:
Stocks
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S&P 500 futures were little changed as of 11:59 a.m. Tokyo time
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Nikkei 225 futures rose 0.7%.
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Japan’s Topix index rose 0.1%.
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Australia’s S&P/ASX 200 rose 0.9%.
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The Hang Seng Index in Hong Kong rose 0.1%.
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The Shanghai Composite Index rose 0.2%.
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Euro Stoxx 50 futures rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%.
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The euro fell 0.2 percent to $1.0781
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The Japanese yen fell 0.1 percent to 153.15 yen to the dollar
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The yuan in external transactions fell 0.1 percent to 7.1582 per dollar
Cryptocurrencies
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Bitcoin fell 0.3% to $75,760.04
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Ethereum fell 0.1% to $2,889.66
Bonds
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The yield on 10-year Treasury bonds was little changed at 4.33%.
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The yield on 10-year Japanese bonds fell by one basis point to 0.990%.
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The Australian 10-year bond yield fell seven basis points to 4.56%.
Goods
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West Texas Intermediate crude fell 0.6 percent to $71.92 a barrel
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Gold in spot transactions fell 0.3 percent to $2,698.06 per ounce
This story was produced with assistance from Bloomberg Automation.
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