A global gauge of stocks gained for a sixth straight session as equity benchmarks for Australia, South Korea and China all advanced more than 1%.
Chinese tech companies were in focus, with the Hang Seng Tech index opening more than 2% higher. The dollar weakened to a four-month low.
US futures advanced to compound Wednesday gains that pushed the S&P 500 to the highest level in nearly two years. Apple Inc shares touched a new high, helping push the Dow Jones Industrial Average to a record. Japan equities were an outlier, falling in part due to a strong yen.
Those moves followed dovish signs Wednesday from the Fed, which held rates steady but indicated through its “dot plot” that officials anticipate cutting rates 75 basis points in 2024 — a sharper pace of cuts than indicated in September.
“The Fed has delivered an early Christmas present to markets,” said Kellie Wood, deputy head of fixed income at Schroders Plc in Sydney.
“The next move is a cut and markets are now anticipating a faster and sharper easing cycle.” Wood anticipates “strong performance across all markets” on Thursday in a broad risk-on rally.
Treasuries extended gains in Asian trading, after rising sharply in the previous session, with 10-year yields falling below 4% for the first time since August. Swap contracts show bets of 140 basis points of easing in the next 12 months. Australian and New Zealand bonds tracked the moves.
Slowing producer-price gains as energy costs fell in a report released prior to the Fed meeting. That follows Tuesday’s consumer price data that showed a decrease in the annual rate of inflation — further signs that prices are trending back toward the Fed’s target.
Dollar weakness
A gauge of dollar strength slipped after the move in yields, sending the yen higher. Japan’s currency strengthened to levels not seen since August and advanced further early Thursday. The South Korean won and Malaysian ringgit gained more than 1% against the greenback in a sign of strength among emerging markets currencies.
“A textbook dovish pivot response in stocks and the US dollar should bode well for Asian equities,” said Chamath De Silva, a senior fund manager at BetaShares Holdings in Sydney. “The exception might be Japan, which will have to deal with big yen strength.”
Following the Fed meeting, DoubleLine Capital’s Jeffrey Gundlach predicted on CNBC that the 10-year Treasury yield could fall to the low 3% range by next year as bonds rally. Others, including respondents to Bloomberg’s latest Instant Markets Live Pulse survey, see modest gains for stocks and bonds next year and highlighted the prospect that Fed easing may not be as aggressive as markets are now expecting.
Elsewhere, the Aussie dollar extended advances after the nation’s jobless rate rose to the highest level in 1-1/2 years in November. Monetary decisions of the Philippines and Taiwan are due later Thursday.
Country Garden Holdings Co. shares surged as much as 6.5% in the opening minutes of trade on Thursday after a unit of the distressed developer unexpectedly repaid an 800 million yuan ($111 million) bond due Wednesday.
A dovish move from the Fed “gives a lot of flexibility in terms of PBOC pursuing its monetary policy,” as the Chinese central bank is an easing cycle, said William Yuen, investment director for Invesco, on Bloomberg Television. Invesco is overweight in Chinese stocks in its Asia ex-Japan strategies and likes e-commerce retails and services businesses, Yuen said.
In the US, exchange operator Nasdaq Inc. was hit by a system error Wednesday around the time of the Fed’s policy decision that led to some stock orders being cancelled, according to people with knowledge of the matter.
West Texas Intermediate, the US crude benchmark, edged higher but remained around $70. Bitcoin held to a muted advance to trade close to $43,000, and gold was steady above $2,000 per Troy ounce.