Berliner Boersenzeitung - Asian traders cheer US rate cut but gains tempered by outlook

While the move had been priced in for several weeks, investors were cheered by the fact that bank boss Jerome Powell was "less hawkish" in his post-meeting remarks.

The latest cut in borrowing costs -- to their lowest level in three years -- comes as monetary policymakers try to support the US jobs market, which has been showing signs of weakness for much of the year.

Concern about the labour market has offset persistently high inflation, with some decision-makers confident the impact of Donald Trump's tariffs on prices will ease over time.

After a positive lead from Wall Street, most of Asia pushed higher.

Hong Kong, Sydney, Seoul, Singapore, Wellington, Manila and Jakarta were all up, while Tokyo, Shanghai and Taipei dipped.

However, traders have lowered their expectations for a string of further cuts in 2026 after the bank's statement used language used in late-2024 to signal a pause in more rate cuts.

Two members voted against the 25-basis-point cut, though one -- Donald Trump appointee Stephen Miran -- voted for a 50 points cut.

Powell said officials were in a good position to determine the "extent and timing of additional adjustments based on the incoming data, the evolving outlook and the balance of risks".

He also said: "This further normalisation of our policy stance should help stabilise the labour market while allowing inflation to resume its downward trend toward two percent once the effects of tariffs have passed through."

Matthias Scheiber and Rushabh Amin at Allspring Global Investments wrote: "As 2026 begins, we believe the makeup of the board's voting members will come into greater focus and that, while the market is relatively optimistic (pricing in two more rate cuts by the end of 2026), we expect cuts will come after June."

Still, there was plenty of optimism about the outlook for equities, with Axel Rudolph, market analyst at IG, writing ahead of Wednesday's announcement: "The Fed... has room to ease policy without reigniting inflation concerns.

"Disinflation is sufficiently entrenched that rate cuts can proceed at a measured pace, providing a tailwind for risk assets without requiring an economic crisis to justify them.

"This 'Goldilocks' scenario of growth with easing financial conditions is exactly what equity markets need."

And CFRA Research's Sam Stovall said Powell's remarks were "less hawkish than a lot of investors had anticipated" and that he "did sound very supportive of cutting rates more if need be".

Earnings from US software giant Oracle provided a jolt to investors as it revealed a surge in spending on data centres to boost its artificial intelligence capacity.

The news comes as investors grow increasingly worried that the vast sums splashed out on the AI sector will not see the returns as early as hoped.

And shares in Jingdong Industrials -- the supply chain unit of Chinese ecommerce titan JD.com -- briefly slipped as much as 10 percent on the firm's Hong Kong debut, having raised more than US$380 million in an initial public offering.

The dollar extended losses against its main peers, while gold -- a go-to asset as US rates fall -- pushed around one percent higher to sit above $4,200.

Silver hit a fresh record high of $62.8863, having broken $60 for the first time this week on rising demand and supply constraints.

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: DOWN 0.6 percent at 50,308.89 (break)

Hong Kong - Hang Seng Index: UP 0.5 percent at 25,665.26

Shanghai - Composite: DOWN 0.2 percent at 3,893.86

Dollar/yen: DOWN at 155.63 yen from 155.92 yen on Wednesday

Euro/dollar: UP at $1.1703 from $1.1693

Pound/dollar: UP at $1.3386 from $1.3384

Euro/pound: UP at 87.43 pence from 87.36 pence

West Texas Intermediate: UP 0.7 percent at $58.85 per barrel

Brent North Sea Crude: UP 0.6 percent at $62.55 per barrel

(L.Kaufmann--BBZ)