May 02, 2024 (MLN): Most Asian equities rose after Federal Reserve chair Jerome Powell downplayed the prospect of further interest-rate hikes, as Bloomberg reported.

Meanwhile, the yen resumed losses after a sudden jump late in the previous session that hinted at intervention.

Benchmark equity indexes advanced in Australia and Hong Kong, and were little changed in Japan.

Futures contracts for US shares also rallied. With the Fed decision now over, the market is looking ahead to other potential catalysts including Apple Inc.’s quarterly results later Thursday and US payroll numbers Friday.

The yen fell as much as 1.1%, after having surged late Wednesday in New York.

The renewed decline suggests investors are skeptical the Japanese authorities will be able to prevent the currency from declining, given the country’s wide interest-rate differential with the US. Japan’s top currency official Masato Kanda said he had nothing to say when asked if officials had intervened.

“The bar was set high for a hawkish surprise last night” and the Fed “did not attempt to leap it,” said Kyle Rodda, a senior market analyst at Capital.com in Melbourne.

“The markets were also caught off guard by what appears to be another sneak attack from Japan’s Ministry of Finance, with a rapid move in the yen displaying the hallmarks of further intervention.”

The Fed downplayed the potential for imminent rate hikes as officials unanimously decided to leave the target range for the benchmark federal funds rate at 5.25% to 5.5% following a slew of data that pointed to sticky inflation pressures.

Powell said it’s unlikely the central bank’s next move would be to raise rates, saying authorities would need to see persuasive evidence that policy isn’t tight enough to bring inflation back toward the 2% target.

“Jay Powell threaded the needle perfectly,” said Ronald Temple, a strategist at Lazard Asset Management in New York. “He did not take the bait to talk about hiking rates. I believe the FOMC’s cautious approach will be a winner over time as inflation subsides as we progress through the year.”

Dollar Declines

Bloomberg’s index of the dollar fell for a second day, reflecting the drop in US yields following the Fed’s decision. Treasuries were little changed in Asia with the benchmark 10-year yield at 4.62%.

Apple’s figures due after the US market closes on Thursday will give investors a better sense of how the iPhone maker is weathering a sales slump, due in part to a sluggish China market.

“Earnings are looking quite resilient, quite constructive on the equities side,” said John Woods, CIO for Asia Pacific at Lombard Odier, told Bloomberg Television’s David Ingles and Yvonne Man in an interview. “It’s overwhelmingly a US story for now.”

In a sign of buoyant consumption, and American Express Co. and Visa Inc. earlier this month both reported a quarterly profit that topped estimates as credit-card spending climbed.

Further insight into the health of the US economy will come from non-farm payrolls data for April due on Friday.

A Bloomberg Economics model points to an unchanged unemployment rate of 3.8%. That suggests “hiring likely remains too hot for the Fed,” economists Andrej Sokol and Scott Johnson wrote in a note.

In commodities, oil recovered some of its losses from Wednesday when a big jump in US crude inventories that added to concerns about weakening demand.

Gold advanced as investors found comfort in the Fed’s signals it will still pivot to lowering borrowing costs after gaining enough confidence price gains are cooling.

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Posted on: 2024-05-02T09:44:25+05:00