Dollar drops, stocks gain as Fed rate peak nears: markets wrap

The commodity-driven New Zealand and Australian dollars strengthened the most against the greenback as traders trimmed bets on further Fed interest-rate increases this year. Major equity indexes advanced across the region, with Hong Kong-listed technology stocks leading gains. 

The dollar is extending losses as the “market has digested the FOMC decision and the opinion is Powell isn’t more hawkish than before, therefore we’re back to the original peak rate expectation and timeline”, said Mingze Wu, a foreign-exchange trader at StoneX Group in Singapore. “S&P futures are climbing, with the dollar weakening as a result.”

There was something for everyone in Fed Chair Jerome Powell’s remarks on Wednesday after the Fed hiked its benchmark to a 22-year high, but the market finished the US session betting the next move would possibly be a pause.

Traders and Fed policy makers will also have plenty of US data to examine on Thursday alone, including GDP, personal consumption expenditures and initial jobless claims.

US stock futures edged higher in Asia after the Dow Jones Industrial Average gained for a 13th day on Wednesday — the longest winning run since 1987. 

Another driver in the US session was a batch of earnings reports, with results from big tech being scrutinized after shares notched a historic advance in the first six months of the year. Facebook parent Meta Platforms Inc. climbed in late trading after projecting revenue that beat estimates, while eBay Inc. fell on a disappointing profit outlook. 

Samsung earnings

Samsung Electronics Co.’s shares gained on Thursday after the company reported earnings for the second quarter that beat estimates, another signal global tech spending is beginning to recover. Samsung’s results came a day after smaller rival SK Hynix Inc. reported better-than-expected sales.

Macquarie Group Ltd. dropped nearly 5% after flagging the possibility of a profit decline for the first quarter on weak trading conditions.

Meanwhile, XPeng Inc.’s ADRs rallied as well by as much as 16% in US premarket trading after Volkswagen AG plans to invest $700-million in the Chinese electric-vehicle maker. Peers Nio Inc. and Li Auto Inc. also gained on the news.

The yen strengthened for a fourth day as traders await the Bank of Japan’s policy decision Friday and any hint of a shift in its yield-curve control policy. Treasuries rose with the benchmark 10-year yield dropping one basis point to 3.86%

Elsewhere in commodities, both oil and gold gained. DM