Asian Stocks Advance As Fed’s Rate Cut Lifts Mood: Markets Wrap

Asian equities echoed 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 rose 0.5% in early trade, led by the tech and financial sectors. That’s after the S&P 500 closed up 0.7% on Wednesday, just short of all-time highs, while the Russell 2000 gauge of small-caps jumped 1.3% to a record. Bonds rallied as the Fed’s quarter-point rate reduction was accompanied by the authorisation of fresh Treasury bill purchases to rebuild bank reserves.

Nasdaq 100 futures were down 0.3% early in Asia as disappointing results from Oracle Corp. dealt the bullish sentiment a partial blow 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 done enough to help stabilise the threat to employment while leaving rates high enough to continue weighing on price pressures. Officials maintained their outlook for just one cut in 2026 and upgraded their median outlook 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."

Nine out of 12 voters on the Fed’s rate-setting committee supported the decision to lower rates. The reduction and the Fed’s tone matched Wall Street expectations for a “hawkish cut” while officials left intact their outlook for a single cut in 2026.

The US 10-year yield fell around four basis points Wednesday, stalling a prior run up in yields that pushed one global gauge to its highest since 2009, while the policy-sensitive two-year yield fell eight basis points. The dollar weakened.

In Asia, traders will be watching an auction of 20-year Japanese government bonds and an interest-rate decision in the Philippines today.

Earlier, Bank of Canada held rates steady, saying current borrowing costs were appropriate to mitigate the trade war damage.

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.

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.

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 Fed emphasised that future moves will be data-dependent, shifting firmly to a meeting-by-meeting approach," said Daniel Siluk, a portfolio manager at Janus Henderson Investors. "Chair Powell reinforced this stance in his press conference, noting that the Committee sees today’s cut as a ‘prudent adjustment’ rather than the start of a new cycle."

• 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 signalled 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 0.1% as of 9:29 a.m. Tokyo time

• Hang Seng futures rose 0.3%

• Japan’s Topix rose 0.1%

• Australia’s S&P/ASX 200 rose 0.7%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1700

• The Japanese yen rose 0.2% to 155.65 per dollar

• The offshore yuan was little changed at 7.0574 per dollar

• The Australian dollar was little changed at $0.6672

Cryptocurrencies

• Bitcoin fell 0.7% to $91,784.62

• Ether fell 0.8% to $3,313.66

Bonds

• The yield on 10-year Treasuries declined one basis point to 4.14%

• Japan’s 10-year yield declined 1.5 basis points to 1.940%

• Australia’s 10-year yield declined nine basis points to 4.72%

Commodities

• West Texas Intermediate crude rose 0.6% to $58.83 a barrel

• Spot gold rose 0.3% to $4,240.47 an ounce