Asian Stock Markets After Fed Rate Cut: Japan's Nikkei Hits Record High, Kospi Rises, India Opens Strong

Asian stock markets opened on an optimistic note on Thursday after the US Federal Reserve delivered a 25 basis point rate cut after nine months, its first move of 2025. The Federal Reserve Chair, Jerome Powell, said that the rate cut decision was taken to ease financial conditions and support growth.

Asian Market Performance On Sept 19th

Japan (Nikkei 225): The Nikkei 225 surged 1.09% to 45,277.43, hitting an intraday record high. Tech and electronics stocks led the rally, though a firmer yen capped some gains for exporters.

China (Shanghai & Shenzhen): The Shanghai Composite added 0.23% to 3,885.08 in the early trade, while the Shenzhen Component advanced 0.37% to 13,264.34.

Hong Kong (Hang Seng Index): The HSI slipped 0.25% to 26,840.67, dragged down by property developers and financials.

South Korea (Kospi): The Kospi index climbed 0.97% to 3,446.39. Recently, the South Korean index touched a record high after the government announced the decision to scrap the tax-hike plan

Australia (ASX 200): However, on the flip side, Australia's ASX 200 fell 0.42% to 8,781.40, pressured by weaker commodity prices and energy stocks.

Fed Rate Cut in September, Powell Cautions on Jobs and Inflation

In his post-meeting press conference, Federal Reserve Chair Jerome Powell acknowledged that the US economy faces rising challenges despite the 25 bps rate cut. He noted that the unemployment rate has jumped higher, with job creation running below the breakeven level needed to prevent further increases in unemployment. Inflation has also ticked up and remains "somewhat elevated", while overall economic activity has moderated.

"The Fed continues to face a delicate balancing act after a 0.25% rate cut at its latest meeting in September. Whilst the rate cut was expected, it is of more note to listen to what Fed Chair Jerome Powell said in the press conference afterwards, where he mentioned that policy decisions remain challenging, and the committee members are still split on further rate cuts, with 10 out of 19 policymakers seeing two or more rate cuts this year." said Ross Maxwell, Global Strategy Lead at VT Markets

Powell recognised that downside risks to the labour market have risen where supply has outstripped demand, citing AI as one of the reasons for slower hiring. Inflation is still a concern, with costs resulting from tariffs still expected to be passed onto the consumer. Financial markets are likely to welcome the rate cut in the near term, as lower borrowing costs ease pressure on households and businesses. Equity markets may see short-term support, though bond yields could remain volatile as investors weigh growth concerns against inflation risks." Ross further added.

India Stock Market Today

The equity market in India this morning opened on a strong note, turning bullish right from the opening bell. The BSE Sensex climbed 422.11 points, or 0.51%, to 83,115.82, while the Nifty 50 advanced 106.35 points, or 0.42%, to 25,436.60.

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