Asian shares exhibited a mixed performance on Thursday following several days of gains that were primarily fueled by optimistic expectations regarding lower U.S. interest rates. In contrast, U.S. futures showed signs of decline.
In a notable market development, Bitcoin surged over 3%, reaching a new record high of more than $123,000, as reported by CoinDesk. The rally in Bitcoin highlights the continuing strong interest in digital currencies amid fluctuating market conditions.
On the Tokyo Stock Exchange, the Nikkei 225 index experienced a dip of 1.4%, closing at 42,657.94. This decline can be attributed to investors taking profits after a strong uptrend that had previously driven the index to all-time highs. Amidst this, the Japanese yen strengthened against the dollar after comments from U.S. Treasury Secretary Scott Bessent pointed out that Japan is "behind the curve" concerning monetary policy and tightening of near-zero interest rates.
The dollar fell to 146.55 yen, down from 147.39, while the euro slightly decreased to $1.1703 from $1.1705. In other Asian markets, Hong Kong's Hang Seng index lost less than 0.1% to 25,597.85, whereas the Shanghai composite index saw a modest gain of 0.2%, closing at 3,690.88. South Korea's Kospi index slipped 0.3% to 3,215.61, while Australia's S&P ASX 200 index added 0.5% to 8,871.80. Taiwan's TAIEX fell 0.4%, while India's Sensex managed to edge up 0.1%.
Commenting on the situation, Stephen Innes of SPI Asset Management likened the Asian markets to "a party that ran out of champagne before midnight," indicating a sense of caution as the market's exuberance began to diminish.
In the U.S, futures for both the S&P 500 and the Dow Jones Industrial Average were down slightly by less than 0.1%. On the previous day, U.S. stocks showed further upward momentum, which contributed to a global market rally fueled by hopes that the Federal Reserve will consider cutting U.S. interest rates. The S&P 500 climbed 0.3% to reach 6,466.58, while the Dow increased by 1% to close at 44,922.27. In the process, the Nasdaq composite gained 0.1%, finishing at a record 21,713.14.
Bond market yields saw a slight decline, reflecting investors' expectations of a potential interest rate cut by the Fed during its next meeting in September. Lower interest rates are generally seen as beneficial for economic growth as they make borrowing cheaper for U.S. households and businesses—encouraging investments in areas like housing, cars, and equipment. However, this also raises concerns about exacerbating inflation.
On Wall Street, stocks from companies that stand to gain the most from lower interest rates rose sharply. Notably, shares of PulteGroup surged by 5.4%, while Lennar gained 5.2%, leading a broader rally among homebuilders and related industries as lower mortgage rates could stimulate buying activity.
Amidst these financial dynamics, cryptocurrency exchange Bullish marked its first day of trading following an IPO valued at over $10 billion, witnessing an increase of nearly 84% to $68 a share.
The prevailing optimism regarding lower interest rates continues to overshadow criticisms that the U.S. stock market has become overly expensive after its substantial rebound since April. President Donald Trump has openly advocated for interest rate cuts to bolster the economy, often publicly criticizing Fed Chair Jerome Powell.
Nonetheless, the Federal Reserve remains cautious about making any substantive rate cuts. Officials are wary that Trump's aggressive tariff measures could potentially heighten inflationary pressures and are awaiting more data before taking action. A report scheduled for Thursday is expected to reveal a slight acceleration in wholesale inflation to 2.4% for July, up from 2.3% in June.
In commodity markets, early trading on Thursday indicated a rise in U.S. benchmark crude, which gained 24 cents to $62.89 per barrel. Likewise, Brent crude, the international standard, increased by 27 cents to reach $65.90 per barrel.
