Hong Kong (AFP) – Asian markets were mixed Thursday as earlier gains fuelled by the Federal Reserve’s latest interest rate cut were offset by indications the central bank will hold off from further reductions at the start of next year. Disappointing earnings from software giant Oracle also dented sentiment as they revived worries that sky-high valuations for tech companies, boosted by excitement over artificial intelligence, may be stretched after a long-running rally.
While the Fed’s move had been priced in for several weeks, investors took some cheer from the fact that boss Jerome Powell was “less hawkish” in his post-meeting remarks. The latest cut in borrowing costs — to their lowest level in three years — comes as monetary policymakers try to support the US jobs market, which has been showing signs of weakness for much of the year. Concern about the labour market has offset persistently high inflation, with some decision-makers confident the impact of US tariffs on prices will ease over time.
Wall Street provided a positive lead, but after a promising start, Asian equities lost momentum. Tokyo fell along with Hong Kong, Shanghai, Seoul, Taipei and Bangkok, while there were gains in Sydney, Singapore, Wellington, Manila, Mumbai and Jakarta. Traders have lowered their expectations for the number of Fed cuts in 2026 after the bank’s statement used language from late 2024 to signal a pause in more rate cuts. Two members voted against the 25-basis-point cut, though one — Trump appointee Stephen Miran — voted for a 50-point cut.
“This further normalisation of our policy stance should help stabilise the labour market while allowing inflation to resume its downward trend toward two percent once the effects of tariffs have passed through,” Powell said. Matthias Scheiber and Rushabh Amin at Allspring Global Investments wrote: “As 2026 begins, we believe the makeup of the board’s voting members will come into greater focus and that, while the market is relatively optimistic (pricing in two more rate cuts by the end of 2026), we expect cuts will come after June.”
Still, Axel Rudolph, market analyst at IG, wrote ahead of Wednesday’s announcement that “the Fed…has room to ease policy without reigniting inflation concerns.” “Disinflation is sufficiently entrenched that rate cuts can proceed at a measured pace, providing a tailwind for risk assets without requiring an economic crisis to justify them,” Rudolph said. “This ‘Goldilocks’ scenario of growth with easing financial conditions is exactly what equity markets need.”
The mood on trading floors was dampened by the earnings from Oracle, which showed figures on cloud sales and its infrastructure business fell short of forecasts. It also revealed a surge in spending on data centres to boost AI capacity. Markets globally suffered a wobble last month with investors increasingly worried over the vast sums poured into AI, with US chip titan Nvidia becoming the world’s first $5 trillion company in October. Some observers have warned of an AI bubble that could burst and cause a market rout.
In Hong Kong, shares in Jingdong Industrials — the supply chain unit of Chinese ecommerce titan JD.com — briefly slipped as much as 10 percent on the firm’s debut, having raised more than US$380 million in an IPO. The dollar extended losses against its main peers, while gold, a go-to asset as US rates fall, pushed around one percent higher to sit above $4,200. Silver hit a fresh record high of $62.8863, having broken $60 for the first time this week on rising demand and supply constraints.
– Key figures at around 0700 GMT –
Tokyo – Nikkei 225: DOWN 0.9 percent at 50,148.82 (close)
Hong Kong – Hang Seng Index: DOWN 0.2 percent at 25,504.59
Shanghai – Composite: DOWN 0.7 percent at 3,873.32 (close)
Dollar/yen: DOWN at 155.85 yen from 155.92 yen on Wednesday
Euro/dollar: UP at $1.1699 from $1.1693
Pound/dollar: DOWN at $1.3370 from $1.3384
Euro/pound: UP at 87.43 pence from 87.36 pence
West Texas Intermediate: DOWN 0.5 percent at $58.17 per barrel
Brent North Sea Crude: DOWN 0.5 percent at $61.89 per barrel
© 2024 AFP
