HONG KONG — Asian stocks experienced significant gains on Friday, with Japan’s Nikkei leading the charge after Wall Street reached all-time highs following the Federal Reserve’s notable interest rate cut.
U.S. futures and oil prices showed a downward trend.
The Bank of Japan concluded a two-day monetary policy meeting, maintaining its benchmark rate at 0.25%.
In Tokyo, the Nikkei 225 index surged 1.5% to finish at 37,723.91, buoyed by the country’s inflation data from August, which indicated a fourth consecutive month of acceleration. The core consumer price index climbed 2.8% year-on-year in August, surpassing the central bank’s 2% target and suggesting potential for future rate hikes.
Market participants are closely monitoring comments from BOJ Governor Kazuo Ueda regarding the trajectory of future rate adjustments.
An analyst from ActivTrades noted that, considering current economic conditions and central bank statements, further policy changes from the Bank of Japan are unlikely until late this year or early 2025.
The U.S. dollar decreased to 142.47 Japanese yen from 142.62 yen, while the euro rose to $1.1178 from $1.1161.
In China, the central bank opted not to implement additional monetary stimulus, keeping key lending rates unchanged. The one-year loan prime rate (LPR) remains at 3.45%, and the five-year rate, which influences property mortgages, holds steady at 3.85%.
Hong Kong’s Hang Seng Index rose by 1.1% to 18,211.06, while the Shanghai Composite Index dipped by 0.2% to 2,730.00.
Additionally, Australia’s S&P/ASX 200 saw a gain of 0.2% to close at 8,209.50, and South Korea’s Kospi increased 0.5% to 2,593.12.
On Thursday, the S&P 500 experienced a remarkable jump of 1.7% to 5,713.64, marking one of its best performances of the year and surpassing its previous all-time high set in July. The Dow Jones Industrial Average rose 1.3% to 42,025.19, while the Nasdaq composite led the market with a 2.5% increase, closing at 18,013.98.
These Wall Street gains followed positive momentum across European and Asian markets after the Federal Reserve’s first interest rate cut in over four years. This development marks a shift from the previous strategy of maintaining high rates to combat rising inflation, allowing the Fed to focus on sustaining a solid job market and avoiding a recession as inflation subsides.
Initially, Wall Street’s response to the rate cut was muted, as markets had been anticipating lower rates for some time. However, a reversal occurred, with stocks gaining unexpectedly on Thursday.
As pressures mount on the Fed due to a cooling job market and hiring rates amid higher interest rates, there are concerns that the central bank may have delayed rate cuts too long, potentially harming the economy.
Some investment banks have revised their forecasts to predict more significant cuts to interest rates than previously expected, indicating deeper reductions may be forthcoming.
The uncertainty surrounding the upcoming U.S. presidential election is also a factor. Analysts express concerns that both major political parties may propose policies contributing to increased government debt, which could exert upward pressure on interest rates despite the Fed’s actions.
In the bond market, the yield on the 10-year Treasury remained stable at 3.71%. The yield on the two-year Treasury, more closely aligned with Fed expectations, dropped to 3.58% from 3.63%.
In the energy sector, U.S. benchmark crude oil fell by 7 cents to $71.09 per barrel, while Brent crude, the global standard, decreased by 9 cents, settling at $74.79 per barrel.
