Volkswacht Bodensee - Most Asian markets track Wall St rally after Fed rate signals

Markets have been seized by volatility recently as US President Donald Trump embarks on his hardball trade policy that has seen him impose painful duties on imports from major partners, stoking recession fears.

Some observers have also warned his pledges to slash taxes, regulations and immigration will reignite inflation and force the Fed to reassess its monetary policy, with some even fearing rate hikes.

After a closely watched meeting on Wednesday, the US central bank stood pat on borrowing costs for the second time in a row and said "uncertainty around the economic outlook has increased".

It also predicted the economy would expand 1.7 percent this year, compared with 2.1 percent estimated in December, and tipped core inflation to hit 2.8 percent as opposed to the 2.5 percent previously seen.

However, its dot plot estimate for rate cuts still showed officials saw two this year.

Powell said: "We do understand that sentiment has fallen off pretty sharply, but economic activity has not yet and so we are watching carefully.

"I would tell people the economy seems to be healthy."

He added that inflation had "started to move up" and officials think that is "partly in response to tariffs. And there may be a delay in further progress over the course of this year".

Any increase would be "transitory", Powell said, but warned it would be hard to determine how much of a factor the levies -- as opposed to other factors -- would play in lifting prices.

The remarks were taken as market-supportive and 10-year US Treasury yields, a proxy of monetary policy, dropped.

That was also helped by news the Fed would slow its pace of balance sheet reduction -- the bank ramped up bond-buying during the pandemic to keep rates low and has been offloading them in recent months to normalise monetary policy.

- 'Do the right thing' -

Trump late Wednesday called on decision-makers to cut rates now, urging on his Truth Social platform to "do the right thing".

Kerry Craig, global market strategist at JP Morgan Asset Management, said: "The Fed doesn't have all the answers but faces plenty of questions about how it is interpreting the shift in the US economy and policy impacts.

"For now, the market seems reassured that the Fed is ready to act if needed."

But he added: "Overall, the outlook remains uncertain."

All three main indexes on Wall Street rallied.

And most of Asia followed suit, with Sydney, Seoul, Singapore, Taipei, Wellington and Manila all up.

Jakarta gained almost two percent to extend Wednesday's gains, but the index remains under pressure -- it has dropped 10 percent in 2025 -- on concerns about Indonesia's economy, Southeast Asia's biggest.

Hong Kong, however, retreated after a breathtaking run-up this year that has seen the Hang Seng Index pile on more than 20 percent. Shanghai also dropped.

Tokyo was closed for a holiday.

The yen extended Wednesday's gains after Powell's dovish comments, while the dollar was also softer against the pound and euro.

But lingering tariff fears and geopolitical developments helped safe-haven gold to another record above $3,056.

Oil rose again following a fresh upsurge in Middle East hostilities after Israel launched its most intense strikes on Gaza since a ceasefire with Hamas took effect.

Traders are also keeping tabs on eastern Europe after Trump told Ukraine's President Volodymyr Zelensky that the United States could own and run his country's nuclear power plants as part of his bid to secure a ceasefire with Russia.

Zelensky said he was ready to pause attacks on Russia's energy network and infrastructure, a day after Vladimir Putin agreed to halt similar strikes on Ukraine.

- Key figures around 0250 GMT -

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 24,525.12

Shanghai - Composite: DOWN 0.2 percent at 3,419.55

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: UP at $1.0912 from $1.0903 on Wednesday

Pound/dollar: UP at $1.3010 from $1.3002

Dollar/yen: DOWN at 148.27 yen from 148.71 yen

Euro/pound: UP at 83.88 pence from 83.82 pence

West Texas Intermediate: UP 0.5 percent at $67.50 per barrel

Brent North Sea Crude: UP 0.4 percent at $71.06 per barrel

New York - Dow: UP 0.9 percent at 41,964.63 points (close)

London - FTSE 100: FLAT at 8,706.66 (close)

K.Hofmann--VB