Asia report: Markets mixed as Fed, PBoC hold rates
Asia-Pacific markets were mixed on Thursday as investors reacted to unchanged interest rates in both China and the United States.
While some regional indexes saw gains, losses in Hong Kong and China weighed on sentiment.
“Asian stocks advanced following a strong rally on Wall Street, driven by the Federal Reserve’s signal that it still expects potential interest rate cuts later this year, viewing any inflationary pressures from tariffs as temporary,” said TickMill market strategy partner Patrick Munnelly.
“MSCI’s regional stock index climbed to its highest level since early November, with notable gains in equities across Taiwan, Australia, and South Korea.
“US equity futures also rose during Asian trading hours after the Financial Times reported that Nvidia plans to invest hundreds of billions of dollars in US-manufactured chips and electronics over the next four years.”
Munnelly noted that the Australian dollar weakened after data revealed a surprising drop in employment, contrary to forecasts for an increase.
“Meanwhile, copper prices surged past $10,000 per tonne amid growing tariff concerns, and gold reached another record high.
“Bloomberg's dollar index edged lower, while cash treasuries were unavailable in Asia due to Japan's market closure.
“In contrast to the broader regional uptrend, Chinese shares underperformed.”
Chinese markets fall, others rise after Fed decision
Japan’s markets remained closed for the Vernal Equinox Day holiday, leaving other key markets to set the tone for the session.
Chinese equities fell, with the Shanghai Composite losing 0.51% to close at 3,408.95, while the Shenzhen Component dropped 0.91% to 10,879.49.
Weakness in technology and consumer stocks dragged on sentiment, with Shanghai Fengyuzhu Exhibition plunging 9.59% and Jiangsu Lettall Electronic falling 8.7%.
Hong Kong’s Hang Seng Index suffered the steepest losses in the region, dropping 2.23% to 24,219.95.
Major decliners included Alibaba Health Information Technology, down 6.44%, and China Life Insurance, which fell 5.89%.
In contrast, South Korea and Australia posted gains - the Kospi 100 rose 0.9% to 2,664.11, lifted by strong performances in battery and materials stocks.
Posco surged 6.24%, while LG Chemicals gained 6.2%.
Australia’s S&P/ASX 200 climbed 1.16% to 7,918.90, with Mesoblast leading gains at 6.8% and TPG Telecom rising 5.93%.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 edged up 0.07% to 12,054.72, supported by Mercury NZ’s 3.82% gain.
In currency markets, the dollar was last down 0.11% on the yen, trading at JPY 148.52.
However, the Australian and New Zealand dollars weakened, with the greenback up 1.09% against the Aussie to AUD 1.5902, as it gained 1.37% on the Kiwi, changing hands at NZD 1.7431.
Oil prices remained stable, with Brent crude futures inching up 0.08% on ICE to $70.84 per barrel, and the NYMEX quote for West Texas Intermediate rising 0.04% to $67.19.
Fed, PBoC hold interest rates; employment numbers in focus
The Federal Reserve was at the top of the economic agenda, after it left interest rates unchanged at 4.25% to 4.5% overnight, maintaining its forecast for two rate cuts later this year despite shifting economic projections.
Policymakers now expected inflation to rise while economic growth slows in 2025 - factors that Fed chair Jerome Powell said largely offset each other.
Powell reiterated that the projections remained uncertain, emphasising that future rate decisions would depend on evolving economic data.
China also held its key lending rates steady on Thursday, with the People’s Bank of China keeping the one-year loan prime rate at 3.1% and the five-year rate at 3.6%.
The decision came as Beijing tried to support economic growth while stabilising its currency amid ongoing trade tensions.
Meanwhile, China’s labour market showed signs of further strain, with the youth unemployment rate rising to a four-month high in February.
The jobless rate for 16-to-24-year-olds, excluding students, increased to 16.9%, up from 16.1% in January, according to official data.
Broader unemployment also ticked higher, with the national jobless rate reaching 5.4%, its highest level in two years.
In Australia, employment figures disappointed in February, with a net loss of 52,800 jobs, contrary to expectations of a 30,000 increase.
Despite the decline, the unemployment rate held steady at 4.1%.
Reporting by Josh White for Sharecast.com.