Asian stock markets remained subdued on Wednesday, while gold hovered near record highs, reflecting investor caution amid economic uncertainty and geopolitical tensions. The yen steadied after the Bank of Japan (BOJ) kept interest rates unchanged, as expected.
Key Market Highlights:
Japan’s Monetary Policy & Yen Movement:
- The yen traded at 149.33 per dollar, stabilizing after an initial choppy reaction to the BOJ’s rate decision.
- BOJ policymakers unanimously maintained the short-term policy rate at 0.5%, emphasizing a wait-and-watch approach amid U.S. tariff risks.
- Analysts predict that the next BOJ rate hike could happen as early as June, depending on wage growth data and global trade conditions.
Global Stock Market Trends:
- Japan’s Nikkei Index rose 0.69%, staying near pre-decision levels.
- MSCI’s Asia-Pacific index (excluding Japan) dipped 0.11%, reflecting investor caution.
- Indonesia’s stock market experienced volatile trading after suffering its biggest drop in three years on Tuesday, fueled by fiscal concerns.
- U.S. stocks fell sharply on Tuesday, as traders awaited the Federal Reserve’s policy decision and assessed the impact of Trump’s tariff policies.
Geopolitical Risks & Market Sentiment:
- Israel-Gaza conflict escalated with airstrikes killing over 400 people, breaking a two-month ceasefire and unsettling global markets.
- Russia-Ukraine tensions continue, as Putin agreed to halt attacks on Ukrainian energy infrastructure, but stopped short of a 30-day ceasefire.
Upcoming Federal Reserve Decision & Market Implications:
- The Federal Reserve is expected to hold interest rates steady, with focus shifting to new economic projections and Chair Jerome Powell’s comments.
- Traders anticipate 58 basis points of rate cuts in 2025, with the first cut likely in July, according to LSEG data.
Commodities Update:
- Brent crude futures declined 0.24% to $70.39 per barrel, while WTI crude slipped 0.2% to $66.75.
- Gold prices eased to $3,029 per ounce, slightly below Tuesday’s record high, as investors sought safe-haven assets amid geopolitical uncertainty.
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