Stocks mixed as US rate cut offset by Fed outlook, Oracle earnings
Asian markets were mixed Thursday as earlier gains fuelled by the Federal Reserve’s latest interest rate cut were offset by indications the central bank will hold off from further reductions at the start of next year.
Disappointing earnings from software giant Oracle also dented sentiment as they revived worries that sky-high valuations for tech companies, boosted by excitement over artificial intelligence, may be stretched after a long-running rally.
While the Fed’s move had been priced in for several weeks, investors took some cheer from the fact that 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 US tariffs on prices will ease over time.
Wall Street provided a positive lead but after a promising start Asian equities lost momentum.
Tokyo fell along with Shanghai, Seoul, Taipei and Bangkok, while Hong Kong was marginally down.
There were gains in Sydney, Singapore, Wellington, Manila, Mumbai and Jakarta.
London and Frankfurt opened lower, while Paris edged up.
Traders have lowered their expectations for the number of Fed 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 — Trump appointee Stephen Miran — voted for a 50-point cut.
“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,” Powell said.
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, Axel Rudolph, market analyst at IG, wrote ahead of Wednesday’s announcement that “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,” Rudolph said.
