(Bloomberg) — Asian stocks rose following a rally on Wall Street after the Federal Reserve signaled it still sees room to cut interest rates later this year because any increase in inflation due to tariffs will be brief.
Australian and South Korean shares gained with US futures after the S&P 500 climbed 1.1% and the Nasdaq 100 rose 1.3%. Shares in China slipped in early trade after US-listed Chinese stocks fell on Wednesday in a sign their outperformance against US equities may be faltering. Japanese markets are shut for a holiday, meaning there’s no trading of cash Treasuries in Asia.
Australia’s dollar weakened after jobs data showed employment in the nation declined by 52,800 last month compared with a forecast increase of 30,000. Bloomberg’s index of the US dollar retraced gains from the prior session. Treasury futures edged higher in Asia, extending gains from Wednesday following the Fed decision.
The Fed kept interest rates on hold as economists expected, and Chair Jerome Powell was measured in his assessment of how the President Donald Trump’s actions might shape the economy. Powell cited the potential for the impact of tariffs on inflation to be “transitory.” The jump in stocks, the biggest for any Fed day since July, followed a bruising four-week stretch in which the S&P 500 slid into a correction.
“The market will read this as dovish at the margin, with the Fed not overtly concerned with the economy or inflation. Stocks and bonds rejoice,” said Christian Hoffmann at Thornburg Investment Management.
US stocks rallied despite changes to Fed forecasts that could be viewed as bearish for equities, among them a tamping down of growth expectations in 2025 and a higher estimate of inflation.
The recent correction in US stocks already accounted for a significantly worse economic backdrop than existed when the Fed last met, according to Amanda Lynam, the head of macro credit research at BlackRock Financial Management.
Data Points
In Asia, Chinese banks held their benchmark one-year and five-year loan prime rates unchanged for a fifth month. Separate data for release Thursday includes inflation in Hong Kong and a policy decision in Taiwan. Later Thursday, the Bank of England is forecast to leave interest rates unchanged while the Swiss National Bank is tipped to cut them by 25 basis points, according to consensus forecasts.
Elsewhere, Tencent Holdings Ltd. outlined plans to boost spending on AI infrastructure after posting its fastest pace of revenue growth since 2023. In South Korea, Samsung Electronics Co. pledged to strengthen its position in the high-bandwidth memory chip market in response to shareholder criticism.
‘Not High’
Powell’s calibrated tone on recession risk – stating it was “not high” – soothed nerves among stock investors. The central bank’s move to trim growth assessments also added fuel to the bond rally, with traders and the Fed now aligned on the rate-cut outlook this year.
“Powell came in and gave a pretty dovish performance in the sense of, ‘We got this, we’re in a good place, we can afford to wait, we’ll see how it goes, we’re gonna get the job done’,” said Bill Dudley, the former president of the New York Fed, on Bloomberg Television. “He was pretty reassuring to people that this was all quite manageable.”
The Fed also said it will start shrinking its balance sheet at a slower pace starting next month, reducing the amount of bond holdings it lets roll off every month.
Oil prices inched higher after gaining on Wednesday following a US government report that allayed concerns about near-term demand destruction. Gold also climbed after touching a new high Wednesday as the Fed projected slower growth and higher inflation.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 10:43 a.m. Tokyo time
- Nikkei 225 futures (OSE) rose 0.2%
- Australia’s S&P/ASX 200 rose 1%
- Hong Kong’s Hang Seng fell 1.2%
- The Shanghai Composite fell 0.3%
- Euro Stoxx 50 futures rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0908
- The Japanese yen rose 0.3% to 148.27 per dollar
- The offshore yuan was little changed at 7.2308 per dollar
Cryptocurrencies
- Bitcoin rose 0.6% to $85,904.14
- Ether fell 0.5% to $2,024.86
Bonds
- The yield on 10-year Treasuries declined four basis points to 4.24%
- Japan’s 10-year yield advanced one basis point to 1.515%
- Australia’s 10-year yield declined eight basis points to 4.34%
Commodities
- West Texas Intermediate crude rose 0.4% to $67.46 a barrel
- Spot gold rose 0.2% to $3,053.49 an ounce
This story was produced with the assistance of Bloomberg Automation.
(An earlier version of this story was corrected to delete an extra ‘not’ in paragraph after Fed Decision subhead)
©2025 Bloomberg L.P.
