Asian stock markets opened in the green zone after the day before the US indices ended trading with a strong increase against the background of the continuing truce between Israel and Iran. Additional support for global assets was provided by statements by the head of the US Federal Reserve, Jerome Powell, which reinforced expectations of a key rate cut this year.
Equity markets: Asia picks up Wall Street's momentum
In trading on Wednesday, the MSCI Asia-Pacific index, which tracks the performance of stocks in the region, rose 0.3% after rising more than 2% a day earlier. This momentum is largely due to the growing risk appetite amid the stabilization of the geopolitical situation and increased expectations of easing US monetary policy.
On the eve of the S&P 500 index added 1.1%, and the Nasdaq 100 jumped 1.5%, recording an all-time high since February. However, futures for both indices corrected down on Wednesday morning-investors took a wait-and-see attitude before new macro data.
On Asian markets, Hong Kong's Hang Seng futures added 0.8%, while Japan's Nikkei 225 futures declined 0.2%. The Australian S&P/ASX 200 index showed minimal changes.
Fed signals willingness to cut rates
During a speech to Congress, Fed Chairman Jerome Powell said that the regulator is ready to consider a rate cut while maintaining weak inflationary dynamics and signs of a slowdown in the labor market. He stressed that the Federal Reserve does not focus on specific deadlines, but remains flexible in making decisions: "If inflationary pressures remain subdued, we may well lower the rate-possibly earlier than expected."
Against the backdrop of these signals, the yield on 10-year US Treasury bonds fell by five basis points, and the dollar weakened against most major currencies.
Futures markets are already pricing in two Fed rate cuts before the end of 2025. According to current estimates, the first one may happen as early as September. The probability of a July decline has also increased markedly over the past week.
The debate inside the Fed: Conservatism persists
Despite Powell's comments, some Fed members remain cautious. Neil Kashkari, the head of the Federal Reserve Bank of Minneapolis, pointed out the need for a more in-depth analysis of the consequences of tariff policy. New York Fed President John Williams described the current rate as "reasonable" to assess the impact of the measures already taken.
Michael Barr, a member of the Fed's Board of Governors, on the contrary, expects inflationary pressures to increase due to new tariffs and calls for maintaining a hard line. A similar position was taken by Susan Collins of the Federal Reserve Bank of Boston, who called for a moderately strict policy for price stability.
The truce between Iran and Israel: a factor of stabilization
The situation in the Middle East remains under close attention of investors. The truce between Iran and Israel remains in place for now. According to sources, the parties are complying with the agreements, despite previous violations. US President Donald Trump sharply criticized the violators, and also made an unexpected statement, actually softening the sanctions regime against Tehran.
Trump allowed the possibility of continuing to supply Iranian oil to China — the largest importer of energy resources from Iran - which caused an active reaction in the oil market. The price of WTI crude oil rose by 1%, reaching $65.02 per barrel.
Commodities, Cryptocurrencies and Currencies: Moderate volatility
Against the backdrop of a geopolitical respite and a wait-and-see attitude of central banks, raw materials and digital assets show mixed dynamics:
- Bitcoin declined 0.2% to trade at $105,908.
- Ether fell 0.7% to $ 2,434.
- The Bloomberg Dollar Spot index was almost unchanged.
- The price of gold remained stable.
In Asia, market participants are watching the Bank of Thailand meeting, which is expected to maintain the key rate. At the same time, South Korea faced disappointment: MSCI left the country in the emerging market category, despite efforts to improve market infrastructure and transparency.
Financial markets are in the midst of a realignment of expectations: investors are balancing geopolitical risks and hopes for an easing of monetary policy in the United States. Despite continuing instability, stock indexes are showing growth, which is supported by a temporary decrease in tension in the international arena.
