Euro Stoxx 50 futures rose 1.2%, indicating that the underlying index might reach its highest level since 2000. MSCI’s global share index set an intra-day record, while Asian markets rose to a level last seen in April 2022. Contracts for US stocks also climbed.
The changes in Asia were fueled by advances in IT businesses listed in Hong Kong, Taiwan, and South Korea following Micron Technology Inc.’s strong sales estimate reflecting artificial intelligence-driven demand. Japan’s Nikkei 225 reached a new closing high as exports increased for the third consecutive month.
“It’s a magnificent sea of green” in Asia, said Tony Sycamore, strategist for IG Australia. “There’s just a broad sense of relief that with the Fed out of the way for another six weeks, and with US yields seeming placated for now, it’s back to tech and the buzz around AI returning to the driver’s seat.”
Fed officials maintained their forecast for three cuts in 2024 and slowed the pace of bond reductions, indicating that they are not concerned by a recent resurgence in price pressures. While Jerome Powell reiterated that authorities want to see further evidence that prices are falling, he also stated that it will be acceptable to begin relaxing “at some point this year.”
Treasuries remained flat in Asian trade after Wednesday’s rally on rising anticipation that the Fed will lower rates as early as June. The dollar suffered more losses, as the yen strengthened for the first time in eight days.
Bank of Japan Governor Kazuo Ueda said policymakers recognised the risk of having to increase interest rates quickly if they waited too long to halt the big easing programme, prompting the central bank to act on Tuesday.
The increase in US equities futures comes after the S&P 500 rose 0.9% to a new high. The tech-heavy Nasdaq 100 index, which is more susceptible to policy, gained 1.2% as the Magnificent Seven group of mega-caps rallied. US small-caps
“The Fed appears to have achieved a better balance around its dual mandate of price stability and maximum employment,” said Banco Bilbao Vizcaya Argentaria analysts in a note. “This suggests that it will soon begin to normalise its policy stance, probably in June, although it will proceed cautiously even after that.”
European markets will focus on the Bank of England when it makes its monetary policy decision. The central bank is expected to retain interest rates at a 16-year high, allowing inflationary pressures more time to subside before it eases off on the fastest tightening cycle in decades.
Japan Airlines Co. has announced that it would acquire 42 new Boeing Co. and Airbus SE aircraft in a multibillion-dollar agreement to extend its worldwide network. BMW AG estimates an 8-10% profit for its automotive division this year, with deliveries increasing modestly.
Following the Fed’s statements, gold climbed to more over $2,200 per ounce for the first time, while oil also gained. Bitcoin fluctuated after rising more than 5% on Wednesday.