Asian stocks surge as Fed keeps rate cut hopes alive; Nikkei at record high
Investing.com-- Most Asian stocks rallied on Thursday, with Japan’s Nikkei 225 hitting a record high after the Federal Reserve kept interest rates steady and said it was still considering at least three rate cuts in 2024.
Regional markets were dealt a strong lead-in from Wall Street, with U.S. benchmark indexes ending at record highs on Wednesday after the Fed meeting. U.S. stock futures also rose in Asian trade.
The Fed kept rates steady on Wednesday, with Chair Jerome Powell stating that inflation still remained on path towards the Fed's 2% annual target. Fed officials also maintained forecasts for a total of 75 basis point reduction in rates this year.
Traders were now pricing in an over 70% chance the Fed will kick off its rate hike cycle by as soon as June, according to the CME Fedwatch tool.
The Nikkei 225 index was among the best performers in Asia on Thursday, rising as much as 2.2% to a record high of 40,802 points. The broader TOPIX also surged 1.6% and hit an intraday record high.
Gains were broad-based, as sentiment towards Japanese stocks was also boosted by dovish signals from the Bank of Japan.
While the central bank hiked interest rates for the first time in 17 years and ended its yield curve control program, Governor Kazuo Ueda said that monetary conditions will remain largely accommodative in the near-term, citing uncertainty over the Japanese economy.
This scenario is expected to provide sustained support for Japanese equities in the near-term. But analysts warned that the Nikkei could turn rangebound after hitting 41,000 points, especially if the Japanese economy improves and monetary policy tightens further this year.
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