(Bloomberg) — Asian equities climbed Friday after stocks, bonds and commodities all rallied within the US because the Federal Reserve cut rates of interest.
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Australian and Japanese shares advanced together with Hong Kong futures, while the Golden Dragon index of US-listed Chinese firms jumped 3.5%. The S&P 500 gained 0.7% and the Nasdaq 100 climbed 1.5%, each setting fresh peaks for a second day. An index of world equities also advanced to a record.
Treasuries were little modified in Asia after rallying Thursday when the Fed lowered its benchmark by 25 basis points as economists forecast. The ten-year yield fell 11 basis points in US trading in an indication investors could also be recalibrating initial fears of inflation under a Donald Trump administration. Jobless claims data showing softness within the labor market supported the gains in US sovereign debt on Thursday.
The cross-asset rally was helped along by comments from Fed Chair Jerome Powell who pointed to the strength of the US economy and said he doesn’t rule “out or in” a December rate cut. Powell added the election could have no effect on policy within the near term, and said he wouldn’t step aside if asked by Trump.
“Powell & Co. reminded investors concerning the solid economic footing the US continues to face on,” said Bret Kenwell at eToro. “Powell wouldn’t tip his hand on whether the Fed would likely cut rates in December, which shouldn’t surprise investors. Nonetheless, the Fed appears more comfortable with the labor market and the present US economic backdrop than they did just a few months ago.”
Bloomberg’s dollar index slid 0.8% Thursday, its worst day since August, because the greenback trimmed its post election gains. The yen drifted lower Friday after rallying 1.1% the day before to largely erase its declines against the dollar this week.
Investors will now be focused on China as a legislative meeting wraps up which will end in latest stimulus measures. While Trump’s victory has stirred up tariff threats for China and other developing economies, optimism is high that the authorities will announce measures to offset the impact of potential US trade levies.
Local Chinese banks are joining more higher-yielding offshore loans of mainland firms as rates fall at home amid monetary easing measures.
Elsewhere in Asia, Japanese automaker Nissan Motor Co., will dismiss 9,000 staff and cut a fifth of its manufacturing capability after net income plummeted 94% in the primary half. South Korea said it is going to bolster its monitoring of economic markets and respond “actively” to ease any excessive volatility.