Asian stock markets saw gains on Thursday as traders weighed the Federal Reserve’s decision to keep interest rates steady, signaling a cautious approach to future policy changes.
The US dollar remained stable against major currencies, supported by strong US Treasury yields and an uncertain economic outlook. However, mixed earnings from major tech companies in the US and concerns about global trade dynamics kept market sentiment in check.
While some regional markets were closed for the Lunar New Year holidays, others saw positive movements. Australia’s stock benchmark reached a record high, closing up 0.6%, while Japan’s Nikkei index gained a modest 0.3%. Japan’s currency, the yen, strengthened against the dollar following comments from the Bank of Japan (BOJ) Deputy Governor Ryozo Himino, who indicated that the central bank may continue to raise interest rates in response to economic and price conditions.
The US Federal Reserve’s decision to hold rates steady came as no surprise, with Fed Chair Jerome Powell signaling that the central bank was in no rush to cut rates in the near term. Powell highlighted the importance of monitoring ongoing risks, such as potential tariffs and regulatory changes, which could affect the US economy and monetary policy. While the Fed’s stance was generally positive, it noted that inflation remains above its 2% target, and future rate cuts are not imminent.
In corporate news, earnings reports from US tech giants, including Microsoft, Meta, and Tesla, showed mixed results. Microsoft’s revenue exceeded expectations, while Meta’s outlook for the first quarter fell short. Tesla reported a profit margin that missed analysts’ forecasts, and Apple, which will report its earnings later, remains a focal point for investors.
The US dollar index held steady at 107.92, as traders awaited further economic developments. The euro saw a slight dip, trading at $1.0414, ahead of the European Central Bank’s (ECB) policy meeting, where a rate cut is expected. Sterling was stable at $1.2440, while the yen gained 0.5% to 154.43 per dollar as markets speculated on potential future rate hikes from the BOJ.
Oil prices showed signs of recovery after falling to their lowest levels in early 2025, with US crude futures edging up by 0.2% to $72.73 per barrel. The focus now shifts to President Trump’s trade policies, including possible tariffs on Canada, Mexico, and China, which could have an impact on global oil markets.
In Europe, stock indices posted gains, with the Stoxx 600 rising by 0.4%. Investors in the region are also awaiting the ECB’s rate decision, which is expected to continue its easing cycle in response to sluggish economic growth in the eurozone. Meanwhile, US stock futures were pointing to a higher opening after mixed earnings reports from major tech companies.
