Source – thejakartapost.com
Asian stock markets experienced a mixed performance on Thursday, largely influenced by currency fluctuations and investor reactions to recent developments in the U.S. financial landscape. Japan’s benchmark index, the Nikkei 225, took a significant hit, plunging by 2.6% to 38,094.24, as the U.S. dollar weakened against the yen. This development poses a dual-edged impact on Japan: while a strong yen benefits domestic purchases, it adversely affects major exporters like Toyota Motor Corp. by diminishing the value of their overseas profits.
In contrast, other regional markets displayed varied movements. Australia’s S&P/ASX 200 saw a modest increase of 0.4% to 8,125.80, and South Korea’s Kospi gained 0.5%, reaching 2,785.56. Meanwhile, Hong Kong’s Hang Seng and Shanghai’s Composite Index both experienced declines of 0.3%, ending at 17,285.66 and 2,931.50, respectively. The shift in the currency Asian stock market, with the dollar dropping to 149.61 yen from 149.92 yen, reflects anticipation of a Bank of Japan rate cut. This speculation was further fueled by recent statements from U.S. Federal Reserve Chair Jerome Powell about potential interest rate reductions.
Wall Street Optimism Amid Federal Reserve Rate Speculations
Wall Street witnessed a substantial rally, spurred by growing expectations of upcoming interest rate cuts by the U.S. Federal Reserve. The S&P 500 soared 1.6%, marking its best day since February, while the Dow Jones Industrial Average climbed 99 points, or 0.2%, and the Nasdaq composite surged 2.6%. These gains were driven by a decrease in Treasury yields and clear signals from the Federal Reserve about possible rate cuts in September.
Federal Reserve Chair Jerome Powell indicated that the central bank is approaching a level of comfort regarding inflation that could justify reducing interest rates. This potential shift marks the first rate cut consideration since the COVID-19 pandemic impacted the economy. Powell’s remarks about the delicate balance of timing rate cuts—neither too early to avoid reigniting inflation nor too late to prevent economic harm—highlight the cautious approach being taken by the Federal Reserve.
Tech Stocks Lead Gains Amid Mixed Earnings Reports
The technology sector played a pivotal role in Wall Street’s rally, with major tech stocks posting notable gains. Advanced Micro Devices (AMD) saw a 4.4% increase following better-than-expected quarterly profits and revenue, partially driven by growth in its artificial intelligence (AI) business. This optimism extended to Nvidia, which rose 12.9% after a recent dip, reflecting investor confidence in AI-related ventures.
However, the tech sector’s performance was not uniformly positive. Microsoft fell by 1.1% despite slightly surpassing profit and revenue expectations, due to slower-than-anticipated growth in its Azure cloud-computing business. Similarly, Tesla and Alphabet had underwhelming earnings reports, leading to concerns about the performance of other high-profile tech stocks, collectively known as the “Magnificent Seven.”
Outside the tech realm, companies like Match Group and DuPont provided a boost to the Asian stock market with strong earnings reports. Match Group’s 13.2% jump was attributed to stabilizing user trends for Tinder, while DuPont’s 4.1% rise was due to a recovering electronics business and an optimistic financial forecast. On the downside, Altria Group dropped 3% after falling short of profit and revenue expectations for the quarter.
In the commodities Asian stock market, oil prices surged by approximately 4% following the assassination of Hamas leader Ismail Haniyeh, which raised concerns about potential disruptions in the oil supply from the Middle East. Benchmark U.S. crude increased to $78.43 a barrel, and Brent crude rose to $80.72 a barrel. This geopolitical event underscored the market’s sensitivity to international conflicts and their impact on global oil prices.
