Asian markets are poised for further gains after US markets' positive reaction to the Federal Reserve's signal that interest rates could be slashed by 75 basis points this year, not the 50 basis-point cut many investors had been preparing for.
Asian Markets Set to See Early Gains
Following Wall Street's positive reaction on Wednesday, when the main indexes closed higher by 0.9% to 1.2%, coupled with a decline in Treasury yields and a slip in the dollar, Asian markets are expected to see early gains, according to Reuters.
Despite the upbeat sentiment, Reuters reported concerns about the sustainability of the current market trajectory, considering the high asset prices, robust risk appetite, and low volatility globally.
The MSCI Asia ex-Japan index has experienced a decline of approximately 2.5% in the past week. While the trajectory of US monetary policy remains a significant factor in influencing Asian markets, Thursday's regional economic calendar presents potential market-moving events.
Investors are also eagerly waiting for New Zealand's fourth-quarter GDP data, Australia's unemployment figures, Japan's trade numbers, and several PMI reports.
Japan's Yen on a Downward Trend
Of particular interest is the yen's performance, which remains on a downward trend following the Bank of Japan's recent rate hike and policy shift. The currency has reached historic lows against various currencies, including the offshore Chinese yuan, onshore yuan, the euro, and the dollar.
As trading resumes in Asia on Thursday, attention will turn to the reactions to the decisions of the Federal Reserve and the Bank of Japan. According to Reuters, futures markets are currently pricing in a Fed rate cut in June and expect 75 basis points of easing this year.
The Bank of Japan is forecasted to raise rates by another 10 basis points in September and December, but Nikkei reported that the next hike may likely occur in October.
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