Australian and Japanese shares advanced along with Hong Kong futures, while the Golden Dragon index of US-listed Chinese companies jumped 3.5%. The S&P 500 gained 0.7% and the Nasdaq 100 climbed 1.5%, both setting fresh peaks for a second day. An index of global equities also advanced to a record.
Treasuries were little changed in Asia after rallying Thursday when the Fed lowered its benchmark by 25 basis points as economists forecast. The 10-year yield fell 11 basis points in US trading in a sign investors may be recalibrating initial fears of inflation under a Donald Trump administration. Jobless claims data showing softness in 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 will have no effect on policy in the near term, and said he would not step aside if asked by Trump.
“Powell & Co. reminded investors about the solid economic footing the US continues to stand on,” said Bret Kenwell at eToro. “Powell would not tip his hand on whether the Fed would likely cut rates in December, which shouldn’t surprise investors. However, the Fed appears more comfortable with the labor market and the current US economic backdrop than they did a few months ago.”
Bloomberg’s dollar index slid 0.8% Thursday, its worst day since August, as 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 that may result in new 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 workers and cut a fifth of its manufacturing capacity after net income plummeted 94% in the first half. South Korea said it will bolster its monitoring of financial markets and respond “actively” to ease any excessive volatility.
Fed officials unanimously lowered the federal funds rate and tweaked language to note “labor market conditions have generally eased,” and repeated “the unemployment rate has moved up but remains low.” The statement removed the reference to “further” inflation progress, noting inflation “has made progress toward the committee’s 2% objective but remains somewhat elevated.”
A Bloomberg gauge of the “Magnificent Seven” megacaps added 2.3%. Lyft Inc. jumped 23% after the ride-hailing company gave a bullish outlook. A closely watched gauge of banks dropped 2.7% after gaining over 10% in the previous session. JPMorgan Chase & Co. slid 4.3% after an analyst downgrade.
Gold held on to gains from the prior session. West Texas Intermediate inched lower after a Thursday rally. Bitcoin traded lower after a three-day rally.
