Global stocks and the U.S. dollar climbed on Thursday after the U.S. Federal Reserve announced a 50-basis-point rate cut.
The S&P 500 hit a record high overnight, and while it closed slightly lower, futures rose by 0.67% during Asian trading hours, with Nasdaq futures up 1%.
Across the Asian-Pacific, Japan's Nikkei surged 2.5%, while stock markets in Australia and Indonesia also reached record highs.
Wednesday evening (Thursday AEST), Federal Reserve policymakers reduced the benchmark rate window to 4.75%-5%, aligning with trader expectations.
The U.S. dollar initially dropped to a two-and-a-half-year low against the British pound but rebounded sharply, gaining nearly 1% to 143.55 yen and recovering against the euro at $1.1097.
In response, 10-year Treasury yields jumped by nearly eight basis points to 3.719%. Meanwhile, gold spiked to a record high, just shy of $2,600 an ounce, before stabilising at $2,559.
The Federal Reserve's rate cut is expected to boost consumer spending and support the U.S. economy, potentially prompting other central banks to follow suit with rate reductions.
Fed Chair Jerome Powell emphasised the central bank’s flexible approach to monetary policy, noting that the pace of cuts would be adjusted based on economic conditions. "We’re recalibrating policy down over time to a more neutral level," Powell said.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, while markets in Hong Kong and China also posted gains, bolstered by expectations of further stimulus measures from Beijing following the Fed's move. Chinese bond yields fell in response.
South Korean markets returned from holiday breaks with significant losses in the semiconductor sector, as SK Hynix plummeted 8.7% and Samsung dropped 3.1%.
Oil prices saw a modest decline, with Brent crude futures down 0.3%, trading at $73.42 per barrel.
As the week continues, all eyes are on the Bank of England, which is expected to maintain interest rates at 5% in its upcoming meeting, especially following signs of increased services inflation in August. The Bank of Japan is also set to announce its policy stance on Friday, with expectations that it may hold rates steady while preparing for future hikes, potentially as soon as October.