(Bloomberg) — Asian equities were set to climb Friday after a cross-asset rally in the US lifted stocks, bonds and commodities as the Federal Reserve cut interest rates.
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Australian stocks and equity futures for Japan and Hong Kong all rose, while the Golden Dragon index of US-listed Chinese companies rallied 3.5%. The S&P 500 gained 0.7% and the Nasdaq 100 climbed 1.5%, both setting fresh peaks for a second day. An index of global stocks also advanced to a record.
Treasuries rallied sharply on Thursday, paring declines from the prior day as the Fed cut rates 25 basis points as expected. The 10-year yield fell 11 basis points in a sign investors may be recalibrating initial fears of inflation under a Donald Trump administration. Australian and New Zealand yields fell early, echoing Treasuries.
The moves across asset classes were helped along by comments from Jerome Powell who pointed to the strength of the US economy and said he doesn’t rule “out or in” a December rate cut. The Fed chair added that in the near term, the election will have no effect on policy. Powell also said he would not step aside if asked by Trump.
“Powell & Co. reminded investors about the solid economic footing the US continues to stand on,” said Bret Kenwell at eToro. “Powell would not tip his hand on whether the Fed would likely cut rates in December, which shouldn’t surprise investors. However, the Fed appears more comfortable with the labor market and the current US economic backdrop than they did a few months ago.”
An index of dollar strength suffered its worst day since August as the greenback weakened against major currencies. The yen was steady after staging a comeback on Thursday, rallying 1.1% to largely erase its declines against the dollar this week.
Investors will now be focused on China Friday as a legislative meeting wraps up that may result in new stimulus measures. While Trump’s victory has stirred up tariff threats for China and other developing economies, hopes are high that China will announce measures to offset the impact of potential US trade levies.
Elsewhere, Japanese automaker Nissan Motor Co., will dismiss 9,000 workers and cut a fifth of its manufacturing capacity after net income plummeted 94% in the first half.
Fed officials unanimously lowered the federal funds rate and tweaked language to note “labor market conditions have generally eased,” and repeated “the unemployment rate has moved up but remains low.” The statement removed the reference to “further” inflation progress, noting inflation “has made progress toward the committee’s 2% objective but remains somewhat elevated.”
