Shares in Asia recorded solid increases after Powell signaled that the Fed was ready for action and that it was open to cut interest rates. This has given rise to the appetite for risk, which, however, remains fragile against the backdrop of the war.
Japan led the rally, with Topix rising by more than 1.5%. Shares in Hong Kong rose somewhat, with indices in Korea and Australia also turning green. Earlier, the S & P500 rose more than 2% after Jerome Powell’s statement that the Central Bank was following closely the trade conflict and that the bank was ready to act to preserve US economic growth.
Powell’s colleagues also support the idea of lowering rates, but are still not sure when this will happen. The bond market already estimates more than one fall in interest rates this year. If the trade conflict between the US and China continues, this will lead to slower growth and even more uncertainty.
On other fronts, oil started down with API data showing greater inventory. The Mexican peso fell after another Trump tweet, in which he said the US had not bluffed on the tariffs that should come into effect next week. The New Zealand dollar climbed after the comments of an assistant central bank manager that no further interest rate cuts are foreseen for the time being.
Markets in India, Singapore, Indonesia, Malaysia and the Philippines rested.
Stocks movements recorded during the Asian session:
- Topix rose 1.8%
- Hang Seng added 1.3% to its value
- Shanghai Composite rose by 0.7%
- ASX200 recorded a growth of 0.7%
- Kospi rose 0.6%
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
Trader Martin Nikolov