Nasdaq 100 Index futures dropped as the yield on benchmark Treasuries reached the highest since January 2020.
The U.S. stock market looks poised to reverse some of the gains from Wednesday. The S&P 500 hit a record yesterday as Fed Chairman Jerome Powell stressed the central bank won’t raise interest rates until the U.S. economy shows tangible evidence it has fully healed from Covid-19.
In Asia, Japan’s Topix jumped past the 2,000 mark for the first time since 1991, becoming the region’s top-performing major equity index this year.
Japan’s government bond yields rose on a Nikkei report that the Bank of Japan is considering widening the trading range around the 10-year target, which could spur concerns about policy tightening. The Australian dollar outperformed most major currencies on a strong jobs report.
Investors appear to be somewhat reassured by the Fed’s renewed emphasis on continued policy support. Markets were braced for a more hawkish tone, given the improvement in the economic outlook amid the stimulus-fueled recovery from the pandemic. Inflation concerns drove bond yields sharply higher in recent weeks and spurred a rotation from growth stocks to value shares.
“The market reaction suggests investors are satisfied with the Fed’s explanations for now,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. “Inflation is expected to rise in the coming months, and the Fed may need to provide more hand-holding to the market during this price spike.”
Read: Fed Keeps Zero-Rate Outlook, Sees Inflation Bump Short-Lived
Elsewhere, oil slipped after U.S. crude stockpiles topped half a billion barrels and the International Energy Agency said global supplies are plentiful. Bitcoin traded around $59,000.
Mahjabeen Zaman, senior investment specialist at Citi Australia, discusses the Fed’s decision to keep interest rates on hold, RBA policy and her outlook for markets.
Source: Bloomberg
These are some key events this week:
- Bank of England rate decision Thursday. BOE is expected to leave monetary policy unchanged.
- Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.
— With assistance by Emily Barrett, Olivia Raimonde, and Lu Wang
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