Asian shares, bonds rally as Powell feeds hopes of end to rate hikes
Asian shares and bonds extended a global rally on Thursday as a non-committal Federal Reserve Chair had markets double down on bets that U.S. interest rates have peaked and cuts are on the way.
Investors are now awaiting the results from Apple later in the day, a bellwether for consumer demand and the tech sector.
The Cupertino California-based company is expected to report a 1% decrease in quarterly revenue.
MSCI's broadest index of Asia-Pacific shares outside Japan surged 1.7% to the highest level in one week. Tokyo's Nikkei gained 1.4% to cross the 32,000 level for the first time in two weeks.
China's blue chips were 0.3% higher, while Hong Kong's Hang Seng index jumped 1.7%.
Stock futures in Europe and U.S. also gained. EUROSTOXX 50 futures rose 0.8% early in Asia, while S&P 500 futures added 0.3% and Nasdaq futures increased 0.5%.
Overnight, the Fed held the policy rate steady in its current 5.25%-5.50% range. While Chair Jerome Powell did not rule out another hike, markets judged he was not quite as hawkish as he might have been.
Fed funds futures rallied as markets pared back the risk of a December hike to about 22% and a January move to 28%. Markets have priced in a 70% chance that the tightening is over and rate cuts could amount to 85 basis points next year, beginning as soon as June.
Wall Street and Treasuries rallied.
The S&P 500 gained 1% and the Nasdaq Composite surged 1.6%.
The benchmark 10-year Treasury yield eased another 2 basis points to 4.7089%, the lowest in more than two weeks. Overnight, it tumbled 14 basis points, the biggest daily drop since March, also in part due to a Treasury announcement that said the government will slow increases in the size of its longer-dated auctions.
