(Bloomberg) — Asian equities tracked gains on Wall Street after the Federal Reserve cut interest rates and Chair Jerome Powell voiced optimism that the US economy will strengthen as the inflationary impact from tariffs fades away.
The MSCI Asia Pacific Index was up 0.5% after the S&P 500 rose 0.7% on Wednesday, just short of all-time highs, and the Russell 2000 gauge of small-caps jumped to a record. Bonds rallied as the Fed’s quarter-point rate reduction was accompanied by the authorization of fresh Treasury bill purchases to rebuild bank reserves.
Nasdaq 100 futures were down 0.5% in early Asia trading after the bullish broader sentiment was dealt a blow by disappointing results from Oracle Corp. as markets closed in New York. Shares of the company, whose fate is deeply tied to the artificial intelligence boom, plunged in post-market trading. Nvidia Corp.’s stock also edged lower.
Delivering a third consecutive cut, Powell suggested the Fed had now acted sufficiently to help stabilize the labor market while leaving rates high enough to continue weighing on price pressures. The reduction and the Fed’s tone matched Wall Street expectations for a “hawkish cut” as officials left intact their outlook for a single cut in 2026. They upgraded their median estimate for growth.
“The combination of stronger growth expectations and softer inflation forecasts has increased market expectations for Fed rate cuts,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan Ltd. “In Asia, I anticipate a positive tone for equities and currency appreciation. Export-oriented stocks should benefit from improved US growth prospects.”
The US 10-year yield edged one basis point lower on Thursday. It dropped around four basis points in the previous session, stalling a prior run up in yields that pushed one global gauge to its highest since 2009. The policy-sensitive two-year yield fell eight basis points on Wednesday.
In Asia, traders will be watching an auction of 20-year Japanese government bonds today as well as an interest-rate decision in the Philippines, where the central bank is predicted to cut its key interest rate for a fifth straight meeting.
Meanwhile, Mexican lawmakers gave final approval for new tariffs on Asian imports, broadly aligning with US efforts to tighten trade barriers against China, as President Claudia Sheinbaum seeks to protect local industry.
Elsewhere in markets, a gauge of the dollar edged lower after falling 0.4% on Wednesday. In commodities, gold held gains after the Fed cut while silver pushed to new highs. Oil extended an advance after the US seized a sanctioned tanker off Venezuela, deterring more shipments from the South American producer and raising the risk of a conflict.
In Australia, the Aussie dollar dipped while bonds and stocks extended gains after data showing the economy unexpectedly shed jobs in November was seen weakening the case for rate hikes.
Nine out of 12 voters on the Fed’s rate-setting committee supported the decision to lower rates. Powell also underscored the importance of upcoming economic reports while advising caution on assessing household jobs readouts, given technical distortions after a government shutdown caused a data blackout.
The impact of President Donald Trump’s on-again, off-again tariff offensive has been a key consideration in how the Fed approaches efforts to bring inflation back down to its 2% target. Without the levies, inflation is probably “in the low 2s” right now, Powell said at the press conference following the decision. And their impact is likely to weaken in the second half of next year.
Nick Twidale, chief analyst at AT Global Markets in Sydney, said he is “hesitant” on how much momentum the Fed’s cut will bring to global markets as “the forward guidance was probably less dovish than most investors were hoping for.”
“We may see some fairly choppy markets in the sessions ahead as the market digests what Jerome Powell had to say,” he said.
Corporate News
SK Hynix Inc. fell after South Korea’s main bourse issued a higher-level warning on investing in the stock following strong gains sparked by expectations of a listing in New York. President Donald Trump signaled he’ll oppose a Warner Bros. Discovery Inc. deal that doesn’t include new ownership of CNN, a potential wrinkle for the bid from Netflix Inc. Japan’s stock market is witnessing a record wave of large private transactions known as block trades, stemming from companies reducing cross-shareholdings to improve corporate governance. Chinese artificial intelligence startup DeepSeek has relied on Nvidia Corp. chips that are banned in the country to develop an upcoming AI model, according to a new report in The Information. Coca-Cola Co. said Chief Executive Officer James Quincey is stepping down and will be replaced at the end of March by Henrique Braun, the company’s chief operating officer. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 10:43 a.m. Tokyo time Japan’s Topix fell 0.2% Australia’s S&P/ASX 200 rose 0.5% Hong Kong’s Hang Seng rose 0.9% The Shanghai Composite was little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1703 The Japanese yen rose 0.2% to 155.68 per dollar The offshore yuan was little changed at 7.0571 per dollar The Australian dollar was little changed at $0.6672 Cryptocurrencies
Bitcoin fell 1.5% to $90,990.76 Ether fell 2.2% to $3,266.04 Bonds
The yield on 10-year Treasuries was little changed at 4.14% Japan’s 10-year yield declined 1.5 basis points to 1.940% Australia’s 10-year yield declined seven basis points to 4.74% Commodities
West Texas Intermediate crude rose 0.7% to $58.89 a barrel Spot gold rose 0.2% to $4,237.14 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu and Richard Henderson.
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