Asian markets were in the green in early trading on Friday, November 8, encouraged like Wall Street the previous day by a rate cut by the US Federal Reserve (Fed) and the prospect of further monetary easing.
Fed in easing mode
The US Federal Reserve lowered rates for the second time this year on Thursday by 0.25% – to a range between 4.50% and 4.75% – with Chairman Jerome Powell hailing progress on the inflation front. Powell, however, declined to comment on a possible weakening of the Fed’s independence following the election to the US presidency of Donald Trump, who had shown a habit of meddling in monetary policy during his first term.
“Asian markets end an epic political week, fueled by a surge in risk appetite in US markets after accommodative talk” from Jerome Powell, noted SPI Asset Management’s Stephen Innes. The fact that he paved the way for further rate cuts “albeit at a slower pace, should give a further boost to optimism across the region.”according to this analyst.
The dollar plays appeasement
On the currency markets, the dollar was catching its breath after soaring on the news of Donald Trump’s victory. The greenback did not overreact to the Fed’s rate cut, which had been largely incorporated by the markets. At around 01:45 GMT, the greenback was up 0.1% against the Japanese currency, at 153.06 yen to the dollar. It was up against the common European currency, at 1.0787 euros to the dollar, compared with 1.0805 dollars the previous day.
Oil prices slipped after their rebound of the previous day, as the market continued to assess the impact of a new Trump presidency on black gold prices. At around 01:45 GMT, Brent North Sea crude was down 0.22% at $75.46 a barrel, while West Texas Intermediate (WTI) was down 0.39% at $72.08 a barrel.
Tokyo driven by tech
In Tokyo at around 01:45 GMT, the flagship Nikkei index was up 0.35% at 39,519.39 points, and the broader Topix index was up 0.12% at 2,746.50 points. “The recovery in US technology stocks on Thursday, still benefiting from a “Trump effect” should give a boost to Japanese markets, especially semiconductor-related sectors.”commented Shutaro Yasuda of the Tokai Tokyo Intelligence Lab.
He added that the yen’s renewed strength, as the dollar slid back from Wednesday’s highs, should also penalize Japanese export groups.
Sanctions on the stock market after results
Some Japanese stocks were struggling, with Nissan shares losing 6.63% to 382.8 yen at around 01:50 GMT after dropping as much as -10%, in the wake of the Japanese automaker’s announcement the previous day that it would be cutting 9,000 jobs from its global workforce and trimming production capacity to adapt to a sharp downturn in sales.
Japanese cosmetics giant Shiseido was no better off (-7% at 2,959 yen), after publishing gloomy third-quarter financial results on Thursday and downgrading its annual forecasts, while the recovery of its overseas sales remains sluggish.
Chinese markets optimistic
Chinese markets were also buoyant shortly after opening: Hong Kong advanced 1.2% to 21,203.77 points, Shanghai 0.14% to 3,475.44 points and Shenzhen 0.35% to 2,108.10 points.
In the next few days, analysts will be watching for a series of economic data to take the pulse of the world’s second-largest economy, including consumer prices expected on Saturday and “Singles’ Day” on Monday, the Chinese equivalent of Black Friday, which is generally conducive to consumption.