The Tokyo Stock Exchange, operated by Japan Exchange Group Inc., in Tokyo on February 16, 2024.
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Asia-Pacific markets were mixed on Thursday after comments by US Federal Reserve Chairman Jerome Powell indicated a rate cut in September if inflation data remained “encouraging”.
However, Japan’s Nikkei 225 It fell 2.72%, while the broad-based Topix plunged 3.45%. Indexes were mainly dragged down by losses in property stocks, while heavyweight exporters also saw losses as the yen strengthened.
A stronger yen hurts the competitiveness of Japanese exports, while higher borrowing costs tend to hurt real estate companies.
On Wednesday, the Bank of Japan raised its key interest rate to “around 0.25%,” marking its highest level since 2008. The yen fell below the 150 level against the dollar late Wednesday, gaining 0, 9% and is currently trading at 148.61.
This was revealed by the Ministry of Finance of the country spent 5.53 trillion yen ($36.8 billion) for foreign exchange intervention from June 27 to July 29.
The broad Asian rally comes after the Fed’s Federal Open Market Committee meeting concluded on Wednesday, where it opted to keep the federal funds rate at its current level of 5.25% to 5.5%.
Powell warned that a rate cut was not guaranteed, though he also appeared to rule out a 50 basis point cut.
“I don’t want to be really specific about what we’re going to do, but that’s not something we’re thinking about right now,” he said.
Investors in Asia are also assessing business data from across the region in addition to Fed comments, with market managers in July reporting data from China, Japan and South Korea.
Australia’s S&P/ASX 200 hit new all-time highs, gaining 0.52%.
of South Korea 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 Korea’s exports rose 13.9 percent year-on-year to $57.49 billion, after rising 5.1 percent the previous month. However, the rate was weaker than the 18.4% increase expected in a Reuters poll of economists.
of Hong Kong Hang Seng Index rose 0.2%, while the CSI 300 in mainland China edged lower.
Hong Kong saw it GDP increased by 3.3% on an annual basis in the second quarter, beating expectations for a 2.7 percent rise among economists polled by Reuters.
China’s factory activity contracted in July, according to S&P Global’s Caixin survey. The country’s manufacturing PMI came in at 49.8, surprising economists polled by Reuters who had expected an expansionary rate of 51.5.
A PMI above 50 indicates expansion in the sector and vice versa.
Overnight in the US, stocks rallied after the Federal Reserve kept interest rates unchanged as expected, while traders also returned to large-cap tech names.
The S&P 500 jumped 1.58% to close at 5,522.30, while the Nasdaq Composite rose 2.64% to 17,599.40. It was the best session since February for both indices.
The Dow Jones Industrial Average rose 99.46 points, or 0.24%.
— CNBC’s Pia Singh, Alex Harring and Samantha Subin contributed to this report.