Global Markets: Asian Shares See Modest Gains Amidst U.S. Rate Cut Expectations

On Thursday, Asian shares saw mixed movements, with Japan’s Nikkei 225 leading gains, rising by 1.7% to 40,120.11, while Hong Kong’s Hang Seng experienced a decline of 1.2% to 16,725.10. The S&P/ASX 200 in Sydney rose by 0.4% to 7,813.80, and South Korea’s Kospi added 0.8% to 2,728.82. The Shanghai Composite slipped nearly 0.2% to 3,069.30.

Investors remained optimistic about potential U.S. interest rate cuts this year, which contributed to the positive sentiment in the markets. Analysts highlighted the impact of the recent earthquake on Taiwan Semiconductor Manufacturing Co’s (TSMC) facilities, with expectations of quicker-than-anticipated relief, thus alleviating concerns over production halts.

Yeap Jun Rong, a market analyst at IG, noted that market participants found reassurance in the weaker-than-expected U.S. services purchasing managers index, which countered the surprise rebound in manufacturing activities earlier in the week. This suggests that overall demand may still remain subdued in the Federal Reserve’s inflation fight.

Meanwhile, on Wall Street, the S&P 500 edged up by 0.1%, reaching 5,211.49 points, while the Dow Jones Industrial Average slipped by 0.1% to 39,127.14 points. The Nasdaq composite gained 0.2% to 16,277.46 points.

Among the notable performers on Wall Street, GE Aerospace saw a significant jump of 6.7%, while Cal-Maine Foods reported stronger-than-expected profit for the latest quarter, leading to a 3.6% increase in its share price. However, Intel experienced an 8.2% drop after disclosing financial details about its money-losing foundry business.

Looking ahead, investors are closely monitoring signals from the Federal Reserve regarding potential interest rate cuts. Fed Chair Jerome Powell emphasized the importance of letting incoming data guide policy decisions, indicating that the Fed has time to assess the economic landscape.

Recent reports showing continued strength in the U.S. economy have tempered expectations for aggressive rate cuts. However, a report indicating a cooling in growth for construction and retail sectors provided some relief to investors concerned about inflationary pressures.

In the bond market, Treasury yields fell slightly, while in energy trading, benchmark U.S. crude and Brent crude both saw modest gains. Currency markets saw minimal movements, with the U.S. dollar slightly strengthening against the Japanese yen and remaining relatively stable against the euro.

Overall, market sentiment remains cautiously optimistic, with investors balancing expectations of U.S. interest rate cuts against ongoing economic indicators and geopolitical developments.