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News / Stock Indices / Asian Equity Response to FOMC Projections and Australian Labor Data
Asian Equity Response to FOMC Projections and Australian Labor Data
Published: 21.03.2024
The Asian equity markets demonstrated a positive response to the overnight FOMC economic projections and Fed Chair Powell's press conference. Leading the charge on Thursday was the Hang Seng Index, which propelled both the Nikkei and the ASX 200 into positive territory. Notably, the FOMC projected a median 2024 Fed Funds rate of 4.6%, consistent with December's figures, yet the anticipation of three rate cuts in 2024 fueled demand for riskier assets.
During the morning session, the Hang Seng Index surged by 1.92% to 16,860 points, with the ASX 200 and Nikkei following suit, boasting gains of 0.53% and 1.18%, respectively. Particularly noteworthy was the Nikkei reclaiming the 40,000 handle, despite facing a weaker USD/JPY.
Thursday also saw the release of Australian labor market data for February, potentially impacting the RBA's interest rate trajectory. The Australian unemployment rate witnessed a substantial decline from 4.1% to 3.7%, surpassing economists' forecasts of a 4.0% unemployment rate. According to the Australian Bureau of Statistics, various indicators painted a positive picture: the participation rate increased to 66.7%, full-time employment surged by 78,200, and part-time employment saw an increase of 38,300. Furthermore, the underemployment rate fell to 6.6%.
The significant drop in the Australian unemployment rate holds the potential to support wage growth and subsequently increase disposable income. This upward trend in disposable income may fuel consumer spending, leading to demand-driven inflation. In response, the RBA might contemplate raising the cash rate to mitigate inflationary pressures.
The upbeat labor market figures also impacted the AUD/USD, which rose from $0.65902 to a Thursday session high of $0.66238, marking a 0.46% increase to $0.66163 by the end of Thursday's trading.
In parallel, the Jibun Services PMI for March rose from 52.9 to 54.9, surpassing economists' forecast of 53.4. Notable findings from the preliminary survey included increased new orders and export orders, stronger inflation signals in input and output prices, and a notable rise in employment levels, with capacity pressures intensifying. The service sector's performance remains pivotal for the Bank of Japan's agenda, as it aims to fuel demand-driven inflationary pressures.
The USD/JPY reacted to the Service PMI figures, reaching a high of 150.865 before retreating to a low of 150.261. By Thursday's close, the USD/JPY was down 0.56% to 150.409.
During the morning session, the Hang Seng Index surged by 1.92% to 16,860 points, with the ASX 200 and Nikkei following suit, boasting gains of 0.53% and 1.18%, respectively. Particularly noteworthy was the Nikkei reclaiming the 40,000 handle, despite facing a weaker USD/JPY.
Thursday also saw the release of Australian labor market data for February, potentially impacting the RBA's interest rate trajectory. The Australian unemployment rate witnessed a substantial decline from 4.1% to 3.7%, surpassing economists' forecasts of a 4.0% unemployment rate. According to the Australian Bureau of Statistics, various indicators painted a positive picture: the participation rate increased to 66.7%, full-time employment surged by 78,200, and part-time employment saw an increase of 38,300. Furthermore, the underemployment rate fell to 6.6%.
The significant drop in the Australian unemployment rate holds the potential to support wage growth and subsequently increase disposable income. This upward trend in disposable income may fuel consumer spending, leading to demand-driven inflation. In response, the RBA might contemplate raising the cash rate to mitigate inflationary pressures.
The upbeat labor market figures also impacted the AUD/USD, which rose from $0.65902 to a Thursday session high of $0.66238, marking a 0.46% increase to $0.66163 by the end of Thursday's trading.
In parallel, the Jibun Services PMI for March rose from 52.9 to 54.9, surpassing economists' forecast of 53.4. Notable findings from the preliminary survey included increased new orders and export orders, stronger inflation signals in input and output prices, and a notable rise in employment levels, with capacity pressures intensifying. The service sector's performance remains pivotal for the Bank of Japan's agenda, as it aims to fuel demand-driven inflationary pressures.
The USD/JPY reacted to the Service PMI figures, reaching a high of 150.865 before retreating to a low of 150.261. By Thursday's close, the USD/JPY was down 0.56% to 150.409.
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