Market Frenzy: Japan Tankan Insights, Powell’s Inflation Bombshell, and the Allure of Golden Week

On Saturday, October 1, 2022, commercial and residential buildings in Tokyo’s Minato district were captured in full glory. Amidst this vibrant setting, Asia-Pacific markets presented a mixed performance on Tuesday. This followed Federal Reserve Chair Jerome Powell’s indication that recent significant rate cuts should not imply further aggressive actions from the U.S. central bank. Powell, speaking with Morgan Stanley economist Ellen Zentner, suggested two additional rate cuts this year, totaling another 50 basis points, potentially bringing the federal funds rate to 4.25%-4.5% by the end of 2024, down from its current 4.75%-5%.

In Asia, attention is on the Bank of Japan’s Tankan survey for Q3, reflecting a steady +13 in business optimism among large manufacturers, consistent with prior results, while non-manufacturing sentiment slightly improved to +34, surpassing expectations. The BOJ summary from its Sept. 19-20 meeting juxtaposed a Fed rate cut and highlighted board member concerns about rate hikes amidst financial instability. Japan’s unemployment rate for August decreased to 2.5%, better than expected.

Several Asian markets, including South Korea, Hong Kong, and mainland China, were closed for holidays, with China observing Golden Week. Japan’s markets showed resilience, with the Nikkei 225 recovering 1.07% after a significant fall, and the Topix up by 0.88%. Conversely, Australia’s S&P/ASX 200 dipped by 0.47%.

In the U.S., markets exhibited strength overnight; the S&P 500 set a record close, climbing 0.42% to 5,762.48, and the Dow Jones Industrial Average edged up to a new high of 42,330.15. The Nasdaq Composite also posted a 0.38% gain—all contributing to a robust conclusion for the month and quarter.

Original Story https://www.cnbc.com/2024/10/01/asia-markets.html
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