SINGAPORE: Asian stocks advanced on Thursday after the Federal Reserve cut interest rates and as U.S. and Chinese leaders met to thrash out a trade deal, while the yen weakened after the Bank of Japan kept rates on hold as expected.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.4%, while U.S. S&P 500 e-mini futures moved 0.4% higher after stocks on Wall Street posted a slim loss to snap a four-day winning streak.
Global markets are in the midst of a string of central bank decisions that will give clues about the path ahead for interest rates as the Trump administration imposes blanket tariffs on foreign imports.
“The BOJ is tip-toeing towards a hike,” said Fred Neumann, chief Asia economist at HSBC in Hong Kong. “With October a missed opportunity to nudge rates higher, all eyes are now on December, when a rate hike appears likely.”
The Nikkei 225 fluctuated between gains and losses and was last 0.2% higher after the Bank of Japan’s decision. Though it stood pat on rates, it repeated its pledge to continue increasing borrowing costs if the economy moves in line with its projections.
The yen reversed its earlier gains against the U.S. dollar and was last 0.2% weaker at 153.065 yen. BOJ Governor Kazuo Ueda will hold a press conference later today.
U.S. President Donald Trump is currently meeting Chinese leader Xi Jinping in South Korea. U.S. negotiators have signalled they seek a return to a fragile trade war truce, but tensions remain high and longer-term economic irritants will likely persist between the geopolitical rivals.
The Federal Reserve cut interest rates on Wednesday by a quarter of a percentage point as expected, but the U.S. central bank’s new policy statement included several references to the lack of official data during the ongoing federal government shutdown, and Fed Chair Jerome Powell told reporters later that policymakers are likely to become more cautious if it deprives them of further job and inflation reports.
U.S. stocks ended mixed on Wednesday with the Dow closing slightly lower, the S&P 500 finishing flat and the Nasdaq posting a half percent gain.
Traders have slashed their forecasts of a 25-basis-point rate cut from the U.S. central bank in December, which had been viewed as a near-certainty earlier. Fed funds futures now imply a 67.8% probability that the Fed will hold rates at its next meeting on December 10, compared with a 9.1% chance on Wednesday, according to the CME Group’s FedWatch tool.
The yield on the U.S. 10-year Treasury bond was last around a three-week high of 4.068%, up 1 basis point compared with a previous close of 4.058%.
The dollar index , which measures the greenback’s strength against a basket of six currencies, edged back from a two-week high, down 0.1% at 99.09. Gold was last up 0.1% at $3,932.08 per ounce.
The euro was last 0.1% firmer at $1.1613 ahead of a policy decision by the European Central Bank later in the day at which it is expected to leave rates on hold for a third meeting in a row.
Elsewhere, the KOSPI index jumped 0.8% after Trump and South Korean President Lee Jae Myung finalised details of a trade deal.
Shares in Samsung Electronics surged 3.9% after it reported on Thursday a 32% rise in third-quarter operating profit.
Corporate earnings season is fuelling fresh anxiety among investors over the cost of the AI buildout, even as the U.S. economy appears to remain in rude health, putting pressure on tech megacap stocks that account for the biggest weighting in the S&P 500 Index.
Meta on Wednesday forecast “notably larger” capital expenses next year as its revenues beat market estimates, while Microsoft’s spending on artificial intelligence infrastructure soared to a record of nearly $35 billion in the September quarter. Shares of both companies slumped.
However, rival tech giant and Google parent Alphabet bucked the trend, with shares rising in after-hours trading after it beat revenue expectations.
In energy markets, Brent crude was last down 0.4% at $64.64 per barrel.
