Fluctuations in Asian Markets After Fed Holds Rates Unchanged

Asian equities experienced fluctuations on Thursday following the Federal Reserve's decision to maintain interest rates.

* Japan: Topix opened marginally lower, weighing on Asian equity indices despite a slight uptick in Australian shares.
* Other markets: China, South Korea, and Taiwan remained closed for the Lunar New Year holiday.

Yen Rises Amid Fed Statement

The Japanese yen strengthened slightly against the dollar after a modest gain on Wednesday. Treasury yields remained stable after Wednesday's session ended with minimal changes as traders analyzed adjustments to the Fed's statement.

Fed Signals Patience

The Federal Open Market Committee kept the federal funds rate within the 4.25%-4.5% range. Officials reiterated concerns about "somewhat elevated" inflation but removed language indicating progress towards their 2% target. Fed Chairman Jerome Powell clarified that this change was merely for sentence simplification rather than signaling a change in policy.

Limited Rate Cut Expectations

Expectations for a March rate cut initially surged during the tech-driven stock rout earlier this week, but the swaps market now assigns only a narrow possibility.

US Tech Earnings in Focus

Tesla climbed after forecasting increased vehicle sales following a challenging 2024. Meta rebounded from an initial decline after earnings, while Microsoft declined due to slowed cloud growth. IBM surged on strong sales and earnings.

Loonie Holds Steady

The Canadian dollar stabilized after the Bank of Canada reduced rates without providing guidance on future adjustments.

RBA and BoJ in Focus

Investors will monitor the speech of Reserve Bank of Australia Assistant Governor Brad Jones later Thursday, following weak Q4 inflation data. The BoJ's Deputy Governor Ryozo Himino's speech will also be scrutinized for hints on the central bank's future actions after last week's rate hike.

Earnings Season

Traders are focused on the onset of earnings season for large-cap tech companies, particularly their spending on AI. While profits continue to grow, growth is projected to be the slowest in almost two years.

Tech Concentration Risks

Wall Street is concerned about the high concentration of market leadership among tech giants, resembling the dot-com bubble. The DeepSeek valuation decline highlights the risks associated with such concentration.

Commodities

Oil prices recovered modestly from Wednesday's decline. Crude dropped on Wednesday after President Trump's commerce secretary nominee suggested that tariffs on Canada and Mexico may not be imposed.

Key Market Movements

* S&P 500 futures: Little change
* Topix: -0.1%
* S&P/ASX 200: +0.4%
* Bloomberg Dollar Spot Index: -0.2%
* Euro/USD: $1.0428
* USD/JPY: 155.01
* Bitcoin: $103,590.92
* Ether: $3,105.05
* 10-year Treasury yield: 4.54%
* West Texas Intermediate crude: $72.90