The Tokyo Stock Exchange, operated by Japan Exchange Group Inc., in Tokyo on February 16, 2024.
Bloomberg | Bloomberg |
Markets in the Asia-Pacific region were mixed on Thursday after US Federal Reserve Chairman Jerome Powell hinted at a rate cut in September if inflation data remained “encouraging”.
But Japan’s Nikkei225 fell 2.72%, while the broad-based Topix fell 3.45%. The indices were dragged down mainly by losses in real estate stocks, while major export companies also suffered losses due to the strengthening yen.
A stronger yen hurts the competitiveness of Japanese exports, while higher borrowing costs tend to hit real estate companies.
On Wednesday, the Japanese central bank raised its key interest rate to “around 0.25 percent,” the highest level since 2008. The yen fell below the 150 mark against the dollar late Wednesday, gaining 0.9 percent and currently trading at 148.61.
The country's finance ministry said it spent 5.53 trillion yen ($36.8 billion) on foreign exchange interventions from June 27 to July 29.
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The broad recovery in Asia followed the Fed's Open Market Committee meeting on Wednesday, where it was decided to keep the key interest rate at the current level of 5.25 to 5.5 percent.
Powell cautioned that a rate cut was not guaranteed, but also ruled out a 50 basis point cut.
“I don't want to get really specific about what we're going to do, but that's not something we're thinking about right now,” he said.
In addition to the Fed's comments, investors in Asia are also evaluating economic data from across the region, with July purchasing managers' index data available from China, Japan and South Korea.
The Australian S&P/ASX 200 reached a new all-time high with an increase of 0.52 percent.
South Korea's Kospi rose 0.26%, while the small-cap Kosdaq gained 0.86%. Reuters reported that the country's exports rose at the fastest pace in six months in July, according to preliminary data.
South Korean exports rose 13.9 percent year-on-year to $57.49 billion, after a 5.1 percent increase in the previous month, but the figure was weaker than the 18.4 percent increase expected in a Reuters poll of economists.
Hong Kong's Hang Seng Index rose 0.2%, while the CSI 300 in mainland China declined slightly.
Hong Kong's GDP rose 3.3 percent in the second quarter compared to the same period last year, beating expectations of economists polled by Reuters, who had expected an increase of 2.7 percent.
According to S&P Global's Caixin survey, industrial activity in China declined in July. The country's manufacturing purchasing managers' index came in at 49.8, surprising economists polled by Reuters who had expected an expansionary reading of 51.5.
A PMI above 50 indicates expansion in the sector and vice versa.
In the US, stocks recovered overnight after the US Federal Reserve left interest rates unchanged as expected. At the same time, traders also flocked back to mega-cap technology stocks.
The S&P 500 rose 1.58% to close at 5,522.30, while the Nasdaq Composite rose 2.64% to 17,599.40, marking the best session since February for both indexes.
The Dow Jones Industrial Average gained 99.46 points or 0.24 percent.
— CNBC's Pia Singh, Alex Harring and Samantha Subin contributed to this report.
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