From “NASDAQ”:

Asian shares have faltered after Wall Street took a late spill. Investors are sticking to their bets for substantial cuts in U.S. interest rates this year. The Federal Reserve committee decided yesterday not to cut rates until inflation is truly under control, and analysts expect the first cut in June at the earliest.

Fed Chair Jerome Powell stated that a rate cut as early as March seemed unlikely, but he also conceded that everyone on the committee was looking to ease this year. Analysts at JPMorgan note that strong employment gains won’t necessarily prevent rate cuts.
Markets actually doubled down on a May cut, pricing in 32 basis points of cuts. Goldman Sachs analysts are sticking to their call for a first cut in May, and they expect a total of 5 cuts in 2024 and 3 more in 2025 due to falling core inflation.

Investors are betting that the longer the Fed delays, the more aggressive it will have to cut rates in the future. As a result, Fed fund futures for December have priced in 143 basis points of easing this year, and Treasuries rallied strongly as 10-year yields dived to 3.91%.

The Asia-Pacific markets were impacted by the renewed jitters over regional U.S. banks. The rush into bonds was further encouraged by the surprising crash of New York Community Bancorp, which contributed to a sharp pullback in the S&P 500. However, sentiment stabilized on Thursday, with futures for S&P 500 and Nasdaq adding 0.2% and 0.3%, respectively.

The choppy trading left Asian markets cautious, with MSCI’s broadest index of Asia-Pacific shares outside Japan dipping 0.3%. Currency markets were jolted by the mixed reaction to the Fed, with the dollar gaining on the euro but losing to the yen as bond yields slid.

Gold gyrated in the wake of the Fed and was last up a fraction at $2,040 per ounce. Oil prices were near flat after retreating on Wednesday amid worries about demand from China and a surprise build in U.S. crude inventories. Brent futures edged up to $80.67 a barrel, while U.S. crude rose to $75.95 per barrel.



Read more: GLOBAL MARKETS-Asia ponders Fed fallout, bonds still bullish on rate cuts