Asian stocks, bonds rally as Federal Reserve cuts rates
bonds and commodities all rallied in the US as the Federal Reserve cut interest rates.
Australian and Japanese shares advanced along with Hong Kong futures, while the Golden Dragon index of US-listed Chinese companies jumped 3.5%. The S&P 500 gained 0.7% and the Nasdaq 100 climbed 1.5%, both setting fresh peaks for a second day. An index of global equities also advanced to a record.
Treasuries were little changed in Asia after rallying Thursday when the Fed lowered its benchmark by 25 basis points as economists forecast. The 10-year yield fell 11 basis points in US trading in a sign investors may be recalibrating initial fears of inflation under a Donald Trump administration. Jobless claims data showing softness in the labor market supported the gains in US sovereign debt on Thursday.
The cross-asset rally was helped along by comments from Fed Chair Jerome Powell who pointed to the strength of the US economy and said he doesn’t rule “out or in” a December rate cut. Powell added the election will have no effect on policy in the near term, and said he would not step aside if asked by Trump.
“Powell & Co. reminded investors about the solid economic footing the US continues to stand on,” said Bret Kenwell at eToro. “Powell would not tip his hand on whether the Fed would likely cut rates in December, which shouldn’t surprise investors. However, the Fed appears more comfortable with the labor market and the current US economic backdrop than they did a few months ago.”
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