Stock market today: Asian shares rise after Wall Street rallies to records

TOKYO (AP) — Asian benchmarks mostly rose on Thursday after U.S. stocks rose to records following the I from the Federal Reserve indication that it expects to implement interest rate cuts later this year.

Japan's benchmark Nikkei 225 rose 1.6% to 40,676.77 after the government reported Exports grew almost 8% in February. compared to the previous year, in the third consecutive month of increase.

Shipments of automobiles and electrical machinery are increasing, helping to reduce the trade deficit to about half of what it was a year earlier, 379 billion yen ($2.5 billion).

Hong Kong's benchmark index rose 1.8% to 16,836.46, while the Shanghai Composite lost 0.2% to 3,073.37, after the Chinese government announced new measures to support the economy.

Sydney's S&P/ASX 200 added 0.5% to 7,735.40. South Korea's Kospi rose 1.5% to 2,729.64.

On Wednesday, the S&P 500 jumped 0.9% to 5,224.62, an all-time high for the second day in a row. It has already gained 9.5% so far this year, slightly better than the full-year average over the past two decades.

The Dow Jones Industrial Average jumped 1% to 39,512.13 and the Nasdaq composite rose 1.3% to 16,369.41. Both also broke records.

Some of Wall Street's jitters at the start of the day disappeared after the Federal Reserve released a survey of its policymakers, which showed that the median still expects the central bank to deliver three interest rate cuts in 2024. That's the same figure they had anticipated. three months earlier, and expectations about the relief such cuts would provide are one of the main reasons US stock prices have set records.

The fear on Wall Street was that the Federal Reserve could reduce the number of cuts planned due to a chain of recent reports that showed inflation remaining hotter than expected. The Federal Reserve has been keeping its main interest rate at its highest level since 2001 to reduce inflation. High rates slow down the overall economy by making borrowing more expensive and hurting investment prices.

Federal Reserve Chair Jerome Powell said he had noted the past two months' worse-than-expected reports, but they "haven't really changed the overall story, which is of inflation gradually declining on a path." sometimes bumpy towards 2%. That story has not changed.”

Powell again said the Fed's next move will likely be a cut sometime this year, but that it needs more confirmation that inflation is getting closer to its 2% target.

The Federal Reserve has a dangerously small margin of error. Cutting rates too soon risks allowing inflation to accelerate again, but cutting rates too late could lead to widespread job losses and a recession.

“I don't think we really know if this is a bump in the road or something else; We’ll have to find out,” Powell said of the January and February inflation data. "In the meantime, the economy is strong, the labor market is strong, inflation is down a lot, and that gives us the ability to approach this issue carefully."

Federal Reserve officials raised their forecasts for growth in the U.S. economy this year, while indicating they could keep the benchmark rate higher in 2025 and 2026 than previously thought.

In the bond market, Treasury yields had a mixed reaction.

The two-year Treasury yield, which closely tracks expectations for Fed action, initially jumped before quickly giving up the gain. It eventually fell back to 4.61%, down from 4.69% on Tuesday, when traders placed bets that the Federal Reserve would begin cutting rates in June.

Traders had already abandoned earlier hopes that the Federal Reserve would begin cutting rates in March. The concern is that if the Federal Reserve waits too long until the summer, a rate cut could appear politically motivated if it comes just before the US elections scheduled for November.

The yield on the 10-year Treasury bond, which also takes longer-term economic growth and inflation into account, initially fell after the Federal Reserve's announcement but then turned around. It later stood at 4.28%, down from 4.30% on Tuesday night.

In other trading, benchmark U.S. crude rose 42 cents to $81.69 a barrel. Brent crude, the international standard, added 50 cents to $86.45 a barrel.

The US dollar fell to 150.48 Japanese yen from 151.26 yen. The euro cost $1.0937, down from $1.0921.

AP Business Writer Stan Choe contributed.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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