- Asian Stocks Rise as Fed Calms Fears Over Tariffs: Markets Wrap
Asian stocks advanced following a rally on Wall Street after the Federal Reserve signaled it still sees room to
cut interest rates later this year because any increase in inflation due to tariffs will be brief. MSCI’s regional
stock benchmark climbed to its highest level since early November as equities in Taiwan, Australia and South
Korea all rallied. US equity futures rose in Asia after the Financial Times reported Nvidia Corp. aims to spend
several hundred billion dollars to procure US-made chips and electronics over the next four years. Japanese
markets are shut for a holiday. Australia’s dollar dropped after a report showed employment in the nation
fell by 52,800 last month, compared with a forecast increase of 30,000. Copper climbed above $10,000 a ton
amid the threat of higher tariffs, while gold rose to another record. Bloomberg’s gauge of the dollar edged
lower, while cash Treasuries were shut in Asia due to the holiday in Japan. - Dow closes nearly 400 points higher after Fed says two rate cuts are still in the cards for 2025
Stocks rallied on Wednesday, with the S&P 500 clawing back more of the rout since late February that took
the benchmark briefly into correction territory, as the Federal Reserve forecast it would still cut interest rates
two times in 2025. The Dow Jones Industrial Average climbed 383.32 points, or 0.92%, and closed at
41,964.63. The S&P 500 jumped 1.08% to end at 5,675.29, and the Nasdaq Composite advanced 1.41% to
settle at 17,750.79. - Oil prices rise on U.S. data, Middle East tensions
Oil prices rose in early trading on Thursday on a decline in U.S. fuel inventories and a ratchetting up of
tensions in the Middle East. Brent crude futures rose 40 cents, or 0.57%, to $71.18 a barrel by 0213 GMT,
while U.S. West Texas Intermediate crude (WTI) gained 34 cents, or 0.51%, to $67.50. The prices rose after
U.S. government data showed a higher-than-expected drawdown in distillate inventories for last week.
Distillate inventories, which include diesel and heating oil, fell by 2.8 million barrels last week, more than the
300,000-barrel drop expected in a Reuters poll. U.S. crude inventories, though, rose 1.7 million barrels,
exceeding an expected 512,000-barrel increase. Global risk premiums rose after Israel launched a
new ground operation on Wednesday in Gaza after breaking a ceasefire of nearly two months. As well, the
U.S. continued airstrikes on Houthi targets in Yemen in retaliation for the group’s attacks on ships in the Red
Sea. Trump has also vowed to hold Iran responsible for future Houthi attacks. Ukrainian President Volodymyr
Zelenskiy said on Wednesday a halt on strikes on energy facilities in the war with Russia could be established
quickly, suggesting the two sides were moving closer to a potential ceasefire that could see the easing of
sanctions and the return of Russian supply to the market. Trump’s Middle East envoy, Steve Witkoff, has said
another round of talks between Russian and U.S. officials aimed at halting the war would take place in Saudi
Arabia on Sunday. In the Americas, Chevron’s CEO asked the Trump administration for an extension of 60
days to wind down its operations in Venezuela, the Wall Street Journal reported on Wednesday, beyond the
original April 1 deadline. Venezuela’s state-run oil company, PDVSA, is making plans to continue
exporting oil from its joint venture with Chevron, Reuters has reported. - Gold climbs to record as Fed signals two rate cuts in 2025
Gold rose to an all-time high on Thursday as the U.S. Federal Reserve hinted at two possible interest rate cuts
this year, bolstering bullion’s appeal amid ongoing geopolitical and economic tensions. Spot gold was little
changed at $3,048.37 an ounce as of 0350 GMT, after hitting an all-time high of $3,055.96 earlier in the
session. U.S. gold futures gained 0.5% to $3,056.50. Gold is driven by “a lot of uncertain market situations,
geopolitical tensions, weaker U.S. dollar, and expectations that interest rates will be cut later,” said Dick
Poon, general manager at Heraeus Metals Hong Kong Ltd. The Fed held its benchmark overnight rate
steady in the 4.25%-4.50% range on Wednesday. Policymakers expect the central bank to deliver two
quarter-percentage-point rate cuts by the end of 2025. Non-yielding gold thrives in a low interest rate
environment. U.S. President Donald Trump’s initial policies, including extensive import tariffs, appear to have
tilted the U.S. economy towards slower growth and at least temporarily higher inflation, Fed Chair Jerome
Powell said. Trump’s tariffs, which have flared trade tensions, are widely thought to be inflationary and
detrimental to economic growth. The tariff uncertainty, rate cut possibilities, and resumption of tensions in
the Middle East have contributed to gold’s rally, prompting bullion to notch 16 record highs so far in 2025,
four of them above the $3,000 milestone. The Israeli military resumed ground operations in central and
southern Gaza as airstrikes killed at least 48 Palestinians, local health workers said. - China’s central bank follows U.S. Fed in keeping rates steady as tariff threats pressure yuan
China kept its key lending rates unchanged on Thursday, as Beijing juggles propping up growth and stabilizing
its currency amid mounting trade frictions. The People’s Bank of China held the 1-year loan prime rate at
3.1% and the 5-year LPR at 3.6%, where they have been since a quarter-percentage-point cut in October.
The rate decision follows the U.S. Federal Reserve’s move to hold benchmark interest rates. Fed officials,
however, indicated likely half a percentage point of rate cuts through 2025. China’s LPRs — normally charged
to banks’ best clients — are calculated monthly based on designated commercial lenders’ proposed rates
submitted to the PBOC. The 1-year LPR influences corporate and most household loans in China, while the 5
year LPR serves as a benchmark for mortgage rates. The PBOC has kept its 7-day rate, the country’s main
policy rate, steady at 1.5% since a cut in October, as the central bank defends the yuan that faces downward
pressure amid threats of higher tariffs. “Policymakers recognize the country’s robust growth momentum
while remaining cautious due to persistent pressures ahead,” said Bruce Pang, adjunct associate professor at
Chinese University of Hong Kong, citing risks from trade tensions, Fed’s steady policy stance, and Chinese
banks’ already-thin net interest margins. China’s economy showed a modest pick up in the first two months
of the year, with retail sales growing 4.0% from a year earlier, faster than the 3.7% rise in December.
Industrial output also came in higher than expectations, expanding 5.9% on year. - “Progress may be delayed”: Powell blames stubborn inflation on Trump tariffs
Federal Reserve Chair Jerome Powell blamed President Donald Trump’s chaotic raft of tariffs for the slow
progress of the central bank’s fight against inflation on Wednesday. Powell had little to share with reporters,
as the Federal Open Market Committee declined to make any adjustments to interest rates following a two
day meeting in Washington, D.C. While defending the decision, Powell noted the “unusually elevated”
uncertainty around the U.S. economy in the early months of Trump’s presidency. Powell and the Fed have set
a target of 2% inflation in 2025 but recent forecasts from the bank’s analysts believe that goal is well out of
reach. “With the arrival of the tariff inflation, further progress may be delayed,” Powell said. “[The
forecast] “doesn’t really show further downward progress on inflation this year, and that’s really due to the
tariffs coming in.” Powell also noted that the tariffs make the Federal Reserve’s attempts to track the root
causes of inflation more difficult. “It is going to be very difficult to have a precise assessment of how much of
inflation is coming from tariffs and from other [places],” Powell said. Inflation on household staples
had cooled in February, per the Bureau of Labor Statistics, before Trump’s plans for tariffs on Canada, Mexico
and China spooked the market and members of his administration. Speaking to news outlets on Wednesday,
Powell said that the fear in the markets is running ahead of the facts on the ground. “We do understand that
sentiment has fallen off pretty sharply but economic activity has not yet,” Powell said. “The economy seems
to be healthy. - Foreign visitors have been driving Japan’s economy. A stronger yen could reverse that trend
Foreign tourists have had a disproportionately large impact on Japan’s economic growth in recent years.
However, their influence could start to wane as the yen strengthens, analysts said. Tourists have been a key
driver of the resurgence of the Japanese economy. Many have been attracted by weakness in the yen, which
has made shopping, entertainment, transport and overnight stays cheaper. What happens if the tide turns
and the yen strengthens? Travel spending in Japan has soared in recent years. Indeed, inbound tourism
contributed half of Japan’s full-year GDP growth rate of 1.5% in 2023, and 0.4 percentage points to Japan’s
0.1% annual GDP growth last year, according to the Mastercard Economics Institute. It marks a dramatic
change in the make-up of the world’s fourth-largest economy. Tourism contributed an average of 0.1
percentage point to GDP from 2010 to 2019, at a time when Japan’s GDP growth rate was averaging 1.2%.
MEI’s report showed that a weaker yen had made Japan a more appealing shopping destination. This is in
stark contrast to other countries around the world, Mastercard’s chief economist for Asia Pacific David Mann
said, where tourists prefer to spend on experiences, such as going to a restaurant, concert or bar. Japan has
been one of Asia’s hottest travel destinations of late. So much so that, according to Japan’s tourism
organization, the country saw a record 36.9 million visitor arrivals for the whole of 2024. Not only that, but
tourists also spent more, with preliminary figures showing that annual spending by international visitors to
Japan in 2024 reached a record high of 8.1 trillion yen ($54.06 billion), a massive 53.4% rise compared to a
year ago. Average individual spending among overseas travelers to Japan rose by 6.8% to 227,000 yen.
However, some of the clement conditions that enabled this higher tourism interest could be about to
reverse. Higher domestic inflation has prompted the Bank of Japan to raise interest rates, in contrast to other
major central banks that are lowering rates. That, in turn, has triggered the yen to strengthen to a five-month
high against the U.S. dollar on March 11. - Euro area annual inflation drops to 2.3 percent in February
The euro area annual inflation rate was 2.3 percent (pct) in February 2025, down from 2.5 pct in January. A
year earlier, the rate was 2.6 pct. European Union annual inflation was 2.7 pct in February 2025, down from
2.8 pct in January. A year earlier, the rate was 2.8%. Eurostat, the statistical office of the European Union,
published these figures. The lowest annual rates were registered in France (0.9 pct), Ireland (1.4 pct), and
Finland (1.5 pct). The highest annual rates were recorded in Hungary (5.7 pct), Romania (5.2 pct), and Estonia
(5.1 pct). Compared with January 2025, annual inflation fell in fourteen Member States, remained stable in
six, and rose in seven. In February 2025, the highest contribution to the annual euro area inflation rate came
from services (+1.66 percentage points, pp), followed by food, alcohol & tobacco (+0.52 pp), non-energy
industrial goods (+0.14 pp), and energy (+0.01 pp). - Tesla shares rose 4.7% after it took steps toward offering a ride-hailing service and Cantor
Fitzgerald upgraded the stock
The California Public Utilities Commission approved Tesla’s bid for a transportation charter-party carrier
permit, allowing it to initially drive employees and later transport members of the public. The new permit is
separate from those used by ride-hailing companies, which offer similar services for compensation using
smartphone apps. The approval also does not allow Tesla to offer rides in autonomous vehicles, the California
commission said. Elon Musk aims to roll out driverless ride-hailing in Austin in June and in California by the
end of this year. Cantor Fitzgerald upgraded their rating on Tesla to a “buy” after the stock fell almost 45%
this year, citing attractive entry points and upcoming catalysts. The analysts are bullish about Tesla’s plan to
offer a paid autonomous taxi-hailing service in June and potential federal framework for self-driving vehicles,
but cautious about Trump’s tariffs and removal of tax credits for electric-vehicle purchases. - The aerospace giant saw its shares pop 6.3% after Chief Financial Officer Brian West gave upbeat
commentary at an investor conference, saying Boeing’s cash burn is easing this quarter and its factories are
improving. West also brushed off concerns about Trump’s tariffs, but said that any impact depends on how
long the uncertainty lasts
The cash burn in the first three months “could be in the hundreds of millions” of dollars better than expected
as working capital comes down, West said. Production of the cash-cow 737, which has been capped by
federal regulators, is “going pretty well,” he said, adding that “the factory looks fantastic.” Boeing handed
over 89 of its aircraft in January and February, out-delivering arch-rival Airbus SE. March deliveries of the 737
and 787 will be similar to February, West said. - Intel shares fell 6.9% as a TSMC board member dismissed a report that the Taiwanese chip giant has
pitched to major US chipmakers about taking stakes in a joint venture that would operate Intel’s factories
Liu Chin-Ching, minister of Taiwan’s National Development Council and a TSMC board member, said that he
could state “with certainty” that the TSMC board has never discussed a collaboration between TSMC and
Intel, according to a report by Taiwan’s official Central News Agency. Liu made the comments when
answering a lawmaker’s question in the parliament on Wednesday, according to CNA. - Microchip Technology shares fall after $1.35 billion convertible stock offering plan announced
Shares of Microchip Technology fell more than 3% on Wednesday after the chipmaker announced plans to
raise capital by offering $1.35 billion of convertible stock. The shares, which had closed up 0.7% at $54.57,
dropped 3.2% to $52.79 in after-hours trading. Microchip has a market value of about $29 billion with 537.82
million shares outstanding. Microchip said it plans to use net proceeds from the offering to pay the cost of
capped call transactions, which are derivatives used to limit share dilution, and to repay existing debt,
including outstanding notes from its commercial paper program. Earlier this month, Microchip announced it
would slash around 2,000 jobs, or about 9% of its workforce, as it faces excess inventory and slowing demand
from car manufacturers. The Chandler, Arizona-based chipmaker said the headcount reductions will be
concentrated in its factories in Gresham, Oregon and Colorado Springs, Colorado, and would cut about $100
million from its annual operating expenses. - Nvidia stock rises as GTC leaves Wall Street analysts ‘comfortable with long term AI demand’
Nvidia (NVDA) stock rose more than 2% Wednesday, stemming losses from a two-day slide that saw shares
drop 5% as the AI chipmaker’s annual GTC event failed to excite investors amid a broader market downturn.
Nvidia stock’s reversal comes as Wall Street analysts walked away from CEO Jensen Huang’s closely watched
GTC 2025 keynote Tuesday optimistic about the company’s roadmap and AI demand, doubling down on their
bullish outlooks on the chipmaker in notes to investors. Those outlooks counter broader concerns about
long-term AI demand and more efficient AI models reducing the need for computing hardware such as
Nvidia’s acclaimed GPUs (graphics processing units, or AI chips). “We came out of the keynote reassured in
NVIDIA’s leadership which if anything seems to be expanding,” Citi analyst Atif Malik wrote, reiterating his
Buy rating on Nvidia stock and $163 price target and calling the chipmaker “king of the hill.” Raymond James
analyst Srini Pajjuri also maintained his Strong Buy rating on Nvidia, echoing Citi’s Malik: “Overall, we walked
away comfortable with long term AI demand and continue to be impressed with NVDA’s roadmap &
technology innovation.” Huang laid out Nvidia’s upcoming AI chips during his presentation in San Jose, Calif.,
on Tuesday afternoon: Nvidia will launch its upcoming AI chip, Blackwell Ultra, in the second half of 2025; its
next AI superchip, Vera Rubin in the second half of 2026; and the next-gen superchip after that (Vera Rubin
Ultra) in the second half of 2027. Huang reiterated that he sees data center spending on compute hardware
(i.e., Nvidia’s total addressable market) reaching $1 trillion.
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