Cheering on Wall Street: A Look at Today's Rising Asian Shares in the Stock Market
Asian shares mostly rose on Thursday following a positive trend on Wall Street, fueled by expectations of U.S. interest rate cuts later this year. Market analysts pointed to the weaker-than-expected U.S. services purchasing managers index as a comforting factor for investors. Despite a surprising rebound in manufacturing activities earlier in the week, the subdued services index suggested that overall demand might remain subdued, giving the Federal Reserve room to maneuver in its inflation-fighting efforts.
On Wall Street, the S&P 500 edged up by 0.1%, reaching 5,211.49 points, while the Dow Jones Industrial Average slipped slightly to 39,127. Concerns are emerging that the robust U.S. economy could potentially hinder the Federal Reserve from implementing as many interest rate cuts as initially anticipated. Although the Fed has hinted at a potential three rate cuts this year to support the economy, Chair Jerome Powell emphasized the importance of observing concrete evidence of inflation trends before taking action, highlighting the risks associated with premature or delayed rate adjustments.
The prevailing sentiment on Wall Street has been influenced by recent reports indicating the resilience of the U.S. economy, sparking uncertainties regarding the extent of rate cuts by the Federal Reserve. A report showing a slowdown in growth across construction, retail, and other U.S. services businesses in the preceding month provided some reassurance to the markets. Attention now turns to the forthcoming comprehensive U.S. government report on the job market for March, expected to dominate economic news for the week.
Traders have significantly scaled back their expectations for the number of rate cuts by the Federal Reserve this year, with initial forecasts of six cuts dwindling to as few as two or even none. Speculation looms that the Fed might exercise caution in adjusting rates too close to the November election to avoid being perceived as politically motivated. Powell emphasized the Fed’s independence from short-term political considerations, reinforcing the central bank’s commitment to making monetary policy decisions based on economic fundamentals rather than immediate political pressures.
Market reactions were reflected in the two-year yield, which dipped to 4.67% from 4.70%, mirroring evolving expectations for Federal Reserve actions. In energy markets, benchmark U.S. crude oil prices experienced a modest increase, reaching $85.77 a barrel. As investors navigate through evolving economic indicators and Federal Reserve signals, the delicate balance between economic stability and monetary policy adjustments remains a critical factor influencing global market dynamics.
