Asian equities wavered on Thursday after the US Federal Reserve cut interest rates but left investors guessing how aggressively it might ease further, as Chair Jerome Powell warned about a weakening labour market.
After months of speculation driven by disappointing jobs data, the Fed lowered borrowing costs by 25 basis points — its first cut since December. The 11-1 vote saw Trump appointee Stephen Miran push for a deeper 50-point move.
The decision came despite inflation still running above the Fed’s 2% target. In its statement, policymakers flagged that “downside risks to employment have risen,” while inflation “remains somewhat elevated.”
At a press conference, Powell acknowledged that job growth is slowing:
“Labour demand has softened, and the recent pace of job creation appears to be running below the break-even rate needed to hold the unemployment rate constant.”
Fed projections showed a divided outlook: a narrow majority of officials expect two more cuts this year, while seven see no further easing. Powell kept his options open, saying the central bank would decide “meeting by meeting.”
Michael Pearce of Oxford Economics called the split “unusual,” suggesting October’s move could hinge on jobs data.
Market Reaction
Wall Street ended mixed — the Dow gained, while the S&P 500 and Nasdaq slipped.
In Asia, sentiment was cautious. Tokyo’s Nikkei rose as a stronger dollar boosted exporters, while Hong Kong and Shanghai fluctuated. Gains were recorded in Seoul, Taipei, and Jakarta, but Sydney, Singapore, Wellington, and Manila closed lower.
Bank of America analysts said markets had hoped Powell would lean harder toward supporting employment:
“We still expect only one more cut in December, though Powell’s comments raise the risk of an additional move in October.”
Jack McIntyre of Brandywine Global said the Fed is prioritizing labour market weakness:
“It makes sense that more rate cuts are expected as monetary policy works with a lag and labour market data is a lagging indicator.”
Other Market Moves
- Gold hovered at $3,660 after hitting a record $3,707 on Wednesday.
- Oil prices slipped, with Brent crude down 0.4% at $67.66.
- Australian energy firm Santos tumbled nearly 12% after Abu Dhabi’s ADNOC-led consortium withdrew a takeover bid.
Key Indexes
- Tokyo (Nikkei 225): +1.1% at 45,277.43
- Hong Kong (Hang Seng): -0.4% at 26,813.58
- Shanghai Composite: +0.2% at 3,882.18
- New York (Dow): +0.6% at 46,018.32
- London (FTSE 100): +0.1% at 9,208.37
