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Asian stocks jumped on Wednesday as trade war fears were overshadowed by comments from Federal Reserve Chairman Jerome Powell, who suggested the bank could cut interest rates again this month.Asian markets opened on the higher end (moderately), following Wall Street’s lead. Tokyo’s Nikkei 225 rose 1.3 percent to 47,463.31, Hong Kong’s Hang Seng gained 1.5 percent to 25,826.42, and Shanghai’s Composite added 0.4 percent to 3,881.03. Taipei, Seoul, Sydney, Singapore, and Wellington also advanced, reflecting renewed investor optimism. Shanghai rose despite data showing Chinese consumer prices fell in September, indicating weak consumer sentiment.After a volatile couple of days marked by fresh flare-ups in US-China tensions, investors returned to markets, resuming a months-long, tech-fuelled rally. Powell has spent most of the year balancing efforts to cap inflation with supporting the labor market, even as President Donald Trump criticised him for not lowering borrowing costs quickly enough.Although price gains continue to exceed the Fed's target, weak economic readings have forced Powell to shift focus toward jobs.
The central bank announced its first rate cut since December last month, and on Tuesday, Powell indicated more could follow. "In this less dynamic and somewhat softer labour market, the downside risks to employment appear to have risen," he said, adding that longer-term inflation expectations remain aligned with the Fed's two-percent goal.Powell also hinted that the Fed could pause reductions in its bond holdings acquired during the pandemic to keep borrowing rates low and support the economy.
No official jobs data has been released for September due to the US government shutdown, but private sector figures point to a marked slowdown in hiring.US markets ended mostly lower on Tuesdays but well off morning lows, with the Dow Jones Industrial Average up 0.4 percent at 46,270.46, and London’s FTSE 100 climbing 0.1 percent to 9,452.77.Powell’s remarks helped investors turn attention away from the latest trade salvos between Washington and Beijing.
Last week, Trump had threatened 100-percent tariffs on Chinese rare earths, but he softened his tone on Sunday. China, however, imposed sanctions on five American subsidiaries of South Korean shipbuilder Hanwha Ocean, accusing them of supporting Washington’s shipping industry probe.Trump said, "We have a fair relationship with China, and I think it'll be fine. And if it's not, that's OK too. We have a lot of punches being thrown, and we've been very successful."
Meanwhile, US Trade Representative Jamieson Greer described Monday’s discussions on the rare earth dispute as broadly positive, saying, "We’ve been pretty successful in finding a path forward with them in the past so we think we'll be able to work through it.
"Currency and commodities also saw small movements. The euro rose to $1.1621, the pound strengthened to $1.3348, and the dollar slipped to 151.17 yen. Oil prices were largely flat, with WTI at $58.71 per barrel and Brent at $62.40 per barrel.
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