Asian equity markets presented a varied picture on Wednesday, responding to a fresh record high on Wall Street and continued weakness in the US dollar. The trading session unfolded as investors globally awaited the Federal Reserve's latest decision on interest rates, widely anticipated to maintain the current stance.
Regional Performance Highlights
South Korea's benchmark Kospi index surged 1.3% to reach 5,152.14, propelled by significant gains in technology stocks. Notably, semiconductor giant SK Hynix climbed 3%, contributing to the index's record-breaking performance.
In contrast, Japan's Nikkei 225 index declined 0.5% to settle at 53,055.58. This downturn was partly attributed to pressure on major exporters as the US dollar rebounded only slightly against the Japanese yen. Toyota Motor Corporation saw its shares fall by 3%, with other leading manufacturers also extending losses.
Currency Markets and Precious Metals
The US dollar traded at 152.75 yen, showing a modest increase from 152.19 yen. However, this represents a nearly 4% depreciation compared to levels observed last week, when it approached 160 yen. This sharp decline prompted intervention warnings from both Japanese and US authorities aiming to stabilise the yen.
Meanwhile, the euro slipped to $1.1995 from $1.2041. An index measuring the dollar's strength against a basket of major currencies has fallen to its lowest point since 2022, reflecting broad-based weakness.
Precious metals experienced dramatic rallies, with gold jumping nearly 3% to surpass $5,200 per ounce and silver soaring 9%. Investors appear to be shifting funds from dollars into assets traditionally viewed as safe havens during periods of market uncertainty.
Other Asian Markets
Hong Kong's Hang Seng index rose 2.4% to 27,782.59, while mainland China's Shanghai Composite added 0.5% to reach 4,160.01. Taiwan's Taiex advanced 1.1%, and India's Sensex gained 0.5%, demonstrating generally positive momentum across the region.
Wall Street Context and Corporate Earnings
The S&P 500 rose 0.4% to 6,978.60 on Tuesday, edging past its previous all-time high. However, the Dow Jones Industrial Average dropped 0.8% to 49,003.41, while the Nasdaq composite climbed 0.9% to 23,817.10, highlighting divergent sector performances.
Several key corporate developments influenced US markets. Corning surged 15.6% after announcing a deal with Meta Platforms worth up to $6 billion to supply optical fibre for data centre expansion. General Motors rose 8.7% and HCA Healthcare rallied 7.1%, both exceeding profit expectations and announcing substantial share buyback programmes.
Market attention now turns to upcoming earnings reports from technology giants, with Meta Platforms, Microsoft, and Tesla scheduled for Wednesday, followed by Apple on Thursday.
Economic Indicators and Fed Outlook
A report from the Conference Board revealed weakening US consumer confidence, dropping to its lowest level since 2014—even below pandemic-era readings. This contrasts with economist expectations for slight improvement.
With inflation persistently above the Fed's 2% target, the central bank faces delicate balancing act. While lower interest rates could stimulate economic growth, they risk exacerbating price increases for consumers. Traders nevertheless anticipate rate cuts later this year.
The dollar's decline has been attributed to multiple factors, including former President Donald Trump's tariff threats against European countries and broader concerns about US government debt levels. These developments have periodically triggered what market observers term "Sell America" sentiment among global investors.
Commodity Markets
In early Wednesday trading, US benchmark crude oil rose 42 cents to $62.81 per barrel, while Brent crude, the international standard, increased 34 cents to $66.93 per barrel.
As corporate earnings season progresses, pressure mounts on companies to deliver robust profit growth that justifies recent stock price rallies. Over the long term, equity valuations typically follow corporate earnings trajectories, making current reporting periods particularly significant for market direction.
