Asian Markets Rebound After U.S. Rate Decision; Japan's Exports Jump 8%

Arjun Pandit
21 Mar, 2024
Mumbai

Asian markets advanced, tracking gains in New York after the Federal Reserve held rates steady as widely expected. 

The Federal Reserve held steady its target range between 5.25% and 5.50% for the fifth time in a row and signaled that the central bank is prepared to lower rates by as much as 75 basis points over the rest of the year. 

The policymaker also sharply raised the estimate for the U.S. economy's annual growth to 2.1% from the previous estimate of 1.4% released in December. 

Stocks on Wall Street soared and powered a global market rally after the central bank's solid economic growth outlook with moderating inflation and interest rate expectations. 

 

Japan Indexes Close at New 34-year Record Highs 

Market indexes in Japan advanced following the U.S. Federal Reserve's rate decisions and the central bank confirming inflationary forces had eased "substantially." 

Market sentiment was also positive after exports rose for the third month in a row in February, and manufacturing activities contracted at the slowest pace since November in March. 

The au Jibun Bank Japan Manufacturing PMI increased to 48.2 in March from a final 47.2 in the previous month, which was the lowest level since August 2020, according to the preliminary report by S&P Global. 

Factory activities contracted for the tenth consecutive month, the weakest drop since last November.

The Nikkei 225 Stock Average jumped 1.9% to 40,777.70, and the Topix index advanced 1.5% to 2,792.94 and traded at a 34-year high. 

The yen traded around 151 against the U.S. dollar after the U.S. rate decision. 

Tech stocks led the gainers, with Softbank, Tokyo Electron, Advantest, and Screen Holdings gaining between 3% and 5%. 

Banks also scaled higher for the second week in a row in the hopes that the Bank of Japan will continue with its rate hike campaign. 

Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Group gained between 2% and 4%. 

 

Japan's Exports Rise 8% In February  

Japan's trade deficit decreased sharply to 379,358 billion yen, or $2.5 billion, in February from 928.908 billion in the same period of the prior year.

Exports advanced by 7.8% from a year ago to 8,249.21 billion, or $55 billion, driven by strong demand from the U.S. and China and higher shipments of automobiles and electrical machinery. 

China-bound shipments increased only 2.5%, suggesting moderate demand growth, while exports to the U.S. and European Union advanced 18.4% and 14.6%, respectively.

Exports advanced for the third month in a row, imports increased for the first time in eleven months, and trade balances swung to deficit for the second month in a row, the Ministry of Finance reported Thursday. 

However, the weak prices of energy products drove the increase in imports at a slower pace of 0.5% from a year ago (8,628.57 billion, or $60 billion), following the recovery in domestic demand. 

In 2023, Japan reported a trade deficit of 9.29 trillion yen, the third trade gap in a row reflecting the elevated price of energy in international markets. 

 

Hong Kong Property Stocks Soar After the HKMA Holds Rates Steady

Stock market indexes in Shanghai and Hong Kong diverged after the U.S. Federal Reserve announced its rate decision. 

Stocks on the mainland changed little in the absence of local economic news, but property stocks soared on the hopes that interest rates would be lower in the months ahead, following the lower U.S. interest rate outlook. 

The Hong Kong Monetary Authority, which tracks U.S. monetary policy, left its interest rate unchanged at 5.75% on Thursday, as the city's currency is pegged to the U.S. dollar. 

The CSI 300 index decreased 0.05% to 3,582.50, and the Hang Seng index soared 2.2% to 16,905.51.

Longfor Group, China Vanke, China Resources Land, and Henderson Land gained between 3% and 6%. 

Tech stocks also participated in the market rally, and Tencent Holdings, JD.com, Alibaba Group, Meituan, and Baidu advanced between 2% and 4%. 

 

India Indexes Rebound 1% 

Stocks in Mumbai rebounded and participated in the global market rally after the U.S. Federal Reserve held its interest rates steady. 

The Sensex and the Nifty indexes jumped as much as 1%, the Indian rupee held firm near its one-month low, and the yield on Indian government bonds held steady. 

The Sensex index increased 0.8% to 72,667.97, and the Nifty index edged up 0.8% to 22,020.35.