Markets React as Fed Announces 50-Basis-Point Rate Cut

The U.S. Federal Reserve announced a 50-basis-point rate cut, causing the dollar to bounce back and bond yields to rise. Asian stocks also saw gains, with Japanese and Australian markets hitting new highs. The Fed's move is expected to support spending and the U.S. economy, prompting other central banks to consider similar actions.

The dollar bounced, long-dated bond yields increased, and Asian stocks rose following the U.S. Federal Reserve's announcement of a 50-basis-point rate cut. The Federal Reserve indicated that the easing cycle would be measured, leading to a record-high S&P 500 overnight, although it closed slightly lower and futures rose by 0.67% in Asia. Nasdaq futures increased by 1%, while Japan's Nikkei jumped 2.5%, and stock markets in Australia and Indonesia reached record highs.

The Federal Reserve lowered its benchmark policy rate by 50 basis points to 4.75-5%, aligning with traders' expectations. After the announcement, the dollar initially dropped to a two-and-a-half-year low against the sterling but rebounded sharply, rising nearly 1% to 143.55 yen by Thursday morning. Ten-year Treasury yields soared nearly eight basis points to 3.719%, while gold prices reached a record high just under $2,600 an ounce before stabilizing at $2,559.

Market analysts believe that the Fed's rate cut will boost spending and the U.S. economy, potentially prompting other central banks to follow suit. The Bank of England and the Bank of Japan are both scheduled to make policy decisions soon. Meanwhile, South Korean markets experienced a downturn due to a negative Morgan Stanley report on SK Hynix, which saw its shares tumble by 8.7%, with Samsung shares also falling by 3.1%. In the commodities market, oil prices slid, with Brent crude futures falling 0.3% to $73.42 a barrel.

(With inputs from agencies.)