icon
icon
icon
icon
$300 Off
$300 Off

News /

Articles /

Asia-Pacific Markets: Powell's Smaller Rate Cuts Signal Optimism

Alpha InspirationMonday, Sep 30, 2024 7:51 pm ET
1min read
Asia-Pacific markets are poised to open higher on Tuesday, following Federal Reserve Chair Jerome Powell's indication that future rate cuts will be less aggressive than previously anticipated. Powell's remarks, delivered at a Q&A session with Morgan Stanley economist Ellen Zentner, have sparked optimism among investors in the region.

Powell stated that the recent outsized cuts enacted by the U.S. central bank should not be interpreted as a sign that future moves will be as aggressive. "This is not a committee that feels like it's in a hurry to cut rates quickly," he said, indicating that the Fed's benchmark interest rate is expected to reach 4.25%-4.5% by the end of 2024, following two more rate cuts of 50 basis points each.

Asian central banks are likely to take a more cautious approach to rate cuts, given Powell's signals. Earlier this year, most Asian countries wanted lower interest rates to stimulate consumer spending and economic growth. However, it was challenging for Asian central banks to cut rates ahead of the U.S., where the federal funds rate was at a 23-year high. Now, with the U.S. Fed delivering a large rate cut of 50 basis points, Asian central banks may follow suit but at a more measured pace.

Powell's comments on the U.S. economy's solid shape have also bolstered investor confidence in Asia-Pacific markets. He emphasized that the Fed's current goal is to support a largely healthy economy and job market, rather than rescuing a struggling economy or preventing a recession. This positive outlook on the U.S. economy has spillover effects on regional markets, as the U.S. is a significant trading partner for many Asian countries.

The Bank of Japan's Tankan survey, which measures the level of business optimism among large Japanese companies, will be closely watched by traders. The quarterly survey is a key economic indicator and may influence investor sentiment in the region. Additionally, Japan's unemployment rate for August, expected to come in at 2.6%, will provide insights into the labor market's health.

China's Golden Week holiday may impact regional market dynamics, as some Asian markets, including South Korea, Hong Kong, and mainland China, are closed. Mainland China will be closed for the rest of the week, which may lead to reduced trading activity and volatility in the region.

In conclusion, Powell's indication of smaller rate cuts has made Asian markets more attractive compared to other regions. Asian central banks are likely to adopt a more cautious approach to rate cuts, while investors' confidence in the region has been bolstered by Powell's positive outlook on the U.S. economy. The Bank of Japan's Tankan survey and Japan's unemployment rate data will provide valuable insights into regional economic conditions, while China's Golden Week holiday may impact market dynamics.
Comments

Add a public comment...
Post
No Comment Yet
Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.
You Can Understand News Better with AI.
Whats the News impact on stock market?
Its impact is
fork
logo
AInvest
Aime Coplilot
Invest Smarter With AI Power.
Open App