Asian markets respond to potential Federal Reserve decision and Japan's currency intervention

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Asian markets respond to potential Federal Reserve decision and Japan's currency intervention
Credit: © Reuters.

Asian stocks and the Japanese yen saw a boost today, as traders anticipate the Federal Reserve's policy decision and respond to potential intervention by Japan's currency chief, Masato Kanda. The MSCI's Asia Pacific Index rose 1%, driven primarily by Japanese stocks and the Topix benchmark. Despite fluctuations in shares in Hong Kong and China due to China's manufacturing contraction, the overall Asian market remained strong.

The Japanese yen also experienced a significant drop, prompting intervention from Japanese authorities including Kanda. This intervention, along with the Bank of Japan's unscheduled bond-purchase operations aimed at limiting yield gains, helped ease losses in Japanese bond futures.

In corporate news, Toyota Motor (NYSE: TM ) raised its full-year profit forecast and announced a share buyback. Rie Nishihara of JPMorgan (NYSE: JPM ) Securities viewed these moves positively for Japan's financial stocks.

Meanwhile, S&P 500 futures marginally dropped after October's rebound, while Treasury 10-year yields decreased slightly following a rise. Traders, including bond dealers, anticipate another rate hold from the Fed, as suggested by FOMC. They are also focusing on the US government's new borrowing plan. Yves Bonzon of Julius Baer indicated that the Fed is nearing the end of its tightening cycle but has not yet provided nuanced guidance.

Internationally, global attention has shifted to oil demand due to the ongoing Israel-Hamas conflict. Additionally, US consumer confidence dropped to a five-month low in October, employment costs accelerated unexpectedly in Q3, and disappointing earnings from Alphabet (NASDAQ: GOOGL ) Inc. and Meta Platforms Inc (NASDAQ: META ). weighed on US stocks. Gold was set for its third straight lower close.

On the other hand, concerns over China's economic recovery led to a 0.4% fall in India's Nifty 50 and Sensex indices. Metal stocks dropped nearly 1%, with Jindal Steel & Power (NS: JNSP ) facing a significant 7% loss. Analysts flagged issues such as flat volume growth, capex timeline extensions, and a 10% Q2 revenue drop. VK Vijayakumar from Geojit Financial Services highlighted the impact of a spike in U.S. bond yields and the Fed's higher-for-longer rate stance on global stocks, warning that persistent foreign investment sell-offs could further affect domestic equities.

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