On Thursday (September 19), the Federal Reserve announced a cut of 50 basis points to the federal funds rate target range, reducing it from 5.25%-5.5% to 4.75%-5.00%, ending the rate hike cycle that started in March 2022. This rate cut exceeded market expectations, triggering widespread reactions in global markets. Although the Fed's move aims to prevent the U.S. economy from "stalling" and achieve a "soft landing," concerns about an economic recession have intensified.
The reaction in the Asia-Pacific markets was mixed. The Nikkei 225 surged 2.3% to reach a new two-week high, leading the Asia-Pacific markets with strong investor confidence in Japanese stocks. Hong Kong's three major indices rose after the holiday, followed by an increase in the Taiwan Weighted Index, while South Korea's KOSPI Index briefly rose by 0.75% at the opening before reversing to decline by over 1% during the day.
In other global markets, U.S. stocks surged overnight but later retreated, with all three major indices closing down, and major European stock indices also fell. HSBC China's Chief Investment Officer, Kuang Zheng, pointed out that while the U.S. economy is slowing, it has not stalled, and the possibility of a "soft landing" is high. The earnings prospects of some companies also provide support for U.S. stocks. Meanwhile, the stock markets in the UK, Japan, India, and South Korea have also become focal points for investors.
