Asian Stock Markets Surge Following Positive Movement on Wall Street – Embracing the Theory “Bad News is Good News”

On Wednesday, there was news from the United States that raised expectations for an interest rate cut. The central bank, the Fed, is expected to possibly make the first interest rate cut as early as September. Contrary to expectations, the June ISM purchasing managers’ index figure for the US service sector fell well below 50, to 48.8 points, with a forecast of 52.7. In the purchasing manager index, a figure above 50 indicates an increase in activity and a figure below 50 indicates a decline.

The minutes of the Fed’s previous interest rate meeting were also announced on Wednesday, showing that the Fed’s Open Market Committee is divided on how long they want to keep interest rates high. Wall Street had a bullish day, followed by Asian stock markets on Thursday with the Asia Dow index up by more than a percent. In Japan, the rate of increase was almost one percent, driven by discretionary consumption and the financial sector.

Exchange rates in mainland China and Hong Kong were slightly down, while there was a small increase in India and a stronger increase in South Korea and Taiwan. On the foreign exchange market, the yen had strengthened on Thursday morning, with the yen up by 0.1 percent against the dollar, the euro, and the pound. “Bad news is good news. That’s why venture capital reacted the way it did after yesterday’s US numbers,” commented City Index and Forex.com’s Fawad Razaqzada on the market sentiment to Bloomberg.

European stock exchanges were expected to open cautiously based on index futures, with some futures slightly up but the Euro Stoxx 50 future down by 0.04 percent.