Asian stocks faced a rocky start on Thursday as the Federal Reserve hinted at delays in interest rate cuts, causing the dollar to plummet against the yen. Oil prices also took a hit, dropping sharply after a surprise increase in U.S. stockpiles.
Japan’s Nikkei fell by 0.7% at the opening bell, while South Korean shares lost 0.5%. Australian shares remained flat. However, S&P 500 futures saw a 0.4% increase after the cash index closed lower the previous night.
The sudden drop in the dollar’s value against the yen raised suspicions of Japanese intervention, with the currency falling by almost five yen in just 40 minutes of late New York trade. Analysts believe Japan may have sold around $35 billion in dollars to discourage speculators from selling yen.
The Federal Reserve’s decision to keep interest rates unchanged and Chair Jerome Powell’s comments on uncertain progress in reducing inflation further impacted the market. Treasuries rallied, pushing yields lower, as the Fed announced a slowdown in its balance-sheet runoff.
Market expectations for rate cuts have decreased significantly, with only one cut priced in for December. Chipmaker Qualcomm exceeded market expectations for sales and profit, boosting its shares by 4% in after-hours trading. Investors are now eagerly awaiting Apple’s results and plans for AI integration in iPhones.
While much of Asia returned from a holiday, Chinese markets remained closed for the week. The yen’s gains and the Fed’s stance on rate hikes pushed the dollar lower in foreign exchange trade. The Australian dollar saw a slight increase, while the euro remained steady.
Commodities were also affected by the stronger dollar, with copper prices falling in London. Gold, however, saw an increase and was holding steady in Asia trade.
Overall, the market remains cautious as investors digest the latest developments and await further economic data.
