Asian shares trade higher after Wall Street climbs moderately as Fed holds rates steady
TOKYO: Asian shares rose moderately on Thursday after a lacklustre finish on Wall Street, with most stocks ticking higher after the Federal Reserve left its main interest rate unchanged, as was widely expected.
Japan’s benchmark Nikkei 225 edged up 0.2% in morning trading to 36,863.15. Australia’s S&P/ASX 200 added 0.2% to 8,190.40. South Korea’s Kospi rose 0.3% to 2,581.62. Hong Kong’s Hang Seng surged 0.8% to 22,864.74, while the Shanghai Composite gained 0.8% to 3,342.66.
Investors continue to watch with trepidation President Donald Trump’s remarks on the trade imbalance, as well as reactions from various nations seeking to appease the US administration amid uncertainty over the long-term economic impact.
Geopolitical tensions also weighed on market sentiment, centred around the standoff between India and Pakistan. Pakistan has vowed to avenge those killed by India’s missile strikes, which New Delhi called retaliation for last month’s massacre of Indian tourists in India-controlled Kashmir. Pakistan described the strikes as an act of war and claimed it had downed several Indian fighter jets.
According to Pakistan’s military, the missile strikes killed 31 people, including women and children, in Pakistan-administered Kashmir and the country’s Punjab province. India’s Defence Ministry stated that the strikes targeted at least nine sites “where terrorist attacks against India have been planned.” Two mosques were hit.
On Wall Street, the S&P 500 gained 0.4%, coming off a two-day losing streak that had ended its nine-day winning run. The Dow Jones Industrial Average added 284 points, or 0.7%, while the Nasdaq Composite rose 0.3%.
Indexes fluctuated throughout the day, with the Dow briefly climbing as much as 400 points on hopes that the United States and China may be making initial moves towards a trade deal to stabilise the global economy. The world’s two largest economies have been imposing escalating tariffs on each other’s products, raising fears of a recession unless trade flows more freely.
The announcement of high-level talks between US and Chinese officials this weekend in Switzerland boosted optimism, though it was tempered after Trump stated he would not reduce his 145% tariffs on Chinese goods as a condition for negotiations. China has demanded a de-escalation of tariffs as a prerequisite for trade discussions, which the meetings are expected to facilitate.
The uncertainty surrounding tariffs has led to sharp swings within the US economy, including a rush of imports aimed at beating the tariffs. Despite such volatility and surveys showing rising pessimism among US households, the Federal Reserve said the economy continues to run “at a solid pace.”
Fed Chair Jerome Powell noted that this gives the central bank time to wait before making any potential moves on interest rates, despite Trump’s lobbying for quicker cuts to stimulate the economy.
“There’s so much that we don’t know,” Powell said. Like the rest of Wall Street, the Fed is waiting to see how Trump’s trade war unfolds and whether his tariffs—which have been significantly higher than expected—will be enforced as proposed.
Powell remarked that the trade war appears to be entering “a new phase,” with the US engaging in more trade talks with other nations. The Fed acknowledged that rising tariffs pose economic risks, potentially weakening the labour market and driving inflation higher.
“If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” Powell warned.
That could ultimately push the Fed into a worst-case scenario known as “stagflation,” where the economy stagnates while inflation remains high.
Meanwhile, major US companies continue to report stronger-than-expected profits in early 2025. The Walt Disney Company surged 10.8% after beating analysts’ profit targets, raising its profit forecast, and gaining over a million new streaming subscribers.
All told, the S&P 500 rose 24.37 points to 5,631.28. The Dow Jones Industrial Average added 284.97 points to 41,113.97, and the Nasdaq Composite gained 48.50 points to 17,738.16.
In the bond market, Treasury yields fell following the Fed’s announcement. The yield on the 10-year Treasury eased to 4.27% from 4.30% late Tuesday.
In energy trading, benchmark US crude rose 33 cents to $58.40 a barrel, while Brent crude, the international standard, added 28 cents to $61.40 a barrel.
In currency trading, the US dollar edged down to 143.64 Japanese yen from 143.76 yen. The euro strengthened to $1.1330 from $1.1317.
By RSS/AP
