The muted reaction across both markets points to a Fed hike that was already fully absorbed by prices well before the decision, leaving oil and BOJ positioning as the more active drivers of Thursday’s session. The pullback in crude on the Saudi supply workaround is doing more work for sentiment than the rate decision itself, consistent with the Korean analyst’s framing that Treasury yields and oil prices, not incremental Fed moves, are the variables to watch from here. Japan’s weaker tone in tech stocks ahead of Friday’s expected BOJ hike suggests the region’s next real test is domestic rather than imported, with any surprise from the BOJ likely to matter more for Tokyo than anything still to come from the Fed this year.
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Asian markets shrugged off a Fed hike everyone saw coming and took their cues from oil prices instead.
Summary:
- Japan’s Nikkei rose around 0.2% after climbing as much as roughly 1% intraday; the broader Topix gained about 0.6%
- Brent crude fell around 2.5% overnight on reports Saudi Arabia is routing extra cargoes via Oman, easing Middle East supply fears
- The Fed’s quarter point hike landed as widely expected, with guidance pointing to another hike later this year
- Tokyo tech stocks traded weaker on caution ahead of Friday’s Bank of Japan decision, where a quarter point hike is also expected, plus lingering concern over a potential AI spending slowdown
- South Korea’s Kospi opened around 1% higher near 6,790; the Kosdaq rose about 0.8% to roughly 823
- Samsung traded up around 1.4%; SK Hynix rose about 0.7%; Korean markets treated the Fed hike as fully priced in rather than a fresh negative
Japan’s Nikkei share average climbed on Thursday as investors bought into beaten down gaming and pharmaceutical names, with sentiment helped by lower crude oil prices and a Federal Reserve rate decision that landed largely as expected. The index rose around 0.2% after climbing as much as roughly 1% earlier in the session, while the broader Topix gained about 0.6%. Overnight, Brent crude fell around 2.5% after reports that Saudi Arabia was offering extra crude cargoes through Oman eased fears of a deeper Middle East supply disruption. The Fed raised its key rate by a quarter point, in line with expectations, while signalling another hike was likely later this year.
One strategist said the session’s gains reflected developments that had somewhat eased broader market uncertainty, though they cautioned that Japanese equities could not yet be described as being in a particularly strong position. Even with gains spread across a wide range of sectors, interest rate sensitive technology stocks traded with a weaker tone in Tokyo, weighed down by caution ahead of the Bank of Japan’s policy decision on Friday and lingering concern about a potential slowdown in AI related spending. The BOJ is widely expected to raise its own policy rate by a quarter point at that meeting.
In earlier trading, before the Japan session’s more complete picture emerged, South Korea’s Kospi had opened around 1% higher near 6,790, while the Kosdaq rose about 0.8% to roughly 823. Samsung Electronics, the market’s largest company by market value, traded near 257,000 Korean won, up around 1.4%, while SK Hynix rose about 0.7%. South Korean markets did not treat the Fed’s move as a fresh negative, since a quarter point increase had already been priced in with high probability ahead of the decision. One analyst said that for equities, the more relevant variables going forward are the direction of 10 year Treasury yields and international oil prices, rather than the prospect of a further quarter point hike from the Fed.
This article was written by Eamonn Sheridan at investinglive.com.