Most Asian stock markets rose Friday ahead of a closely watched speech by U.S. Federal Reserve Chairman Kevin Warsh. Investors are looking for any signal from his remarks about the Fed’s future decisions on interest rates.
Markets remain anxious about interest rates, particularly with inflation still elevated and no sign of an end to the conflict in the Middle East, according to a report by the news agency AFP.
The rally sparked by Nvidia’s strong earnings report has largely faded, turning investor attention back to the broader economy. Markets have renewed their debate over when, or whether, the U.S. central bank will raise interest rates.
At last month’s Fed meeting, officials held rates steady, though three officials dissented in favor of a rate hike. According to the latest data, U.S. inflation has eased slightly but remains well above the Fed’s 2 percent target.
Concerns that inflation will stay elevated for a long time, along with rising oil prices because of the war with Iran, have also pushed up yields on long-term U.S. Treasury bonds — raising the cost of government borrowing.
Investors are hoping Fed Chairman Kevin Warsh’s remarks at the annual gathering of central bankers and economists in Jackson Hole, Wyoming, will offer some clarity on policymakers’ future stance.
However, his last major speech after July’s Fed meeting was fairly vague. Analysts worry that if Warsh again avoids giving direct guidance on future rates, investors may not get the clear answer they’re hoping for.
Stephen Innes of Quintec Intel said this will be Warsh’s first speech since taking over as Fed chairman. He said it could be the most important central-bank speech of the rest of the year, since the Fed’s next policy decision is due roughly three weeks later.
He said recent economic data has somewhat eased the urgency for a quick rate hike. That gives Warsh room to reaffirm the Fed’s tough stance against inflation without necessarily announcing a hike right away.
Innes added: “Warsh is delivering this speech amid a difficult policy environment. Inflation has stayed above target for six straight years now. Meanwhile, Fed officials have begun debating whether tighter monetary policy is still needed to control inflation.”
Most Asian markets rose at the start of trading Friday. But tech shares struggled to hold on to the previous day’s big gains. Tech stocks surged Thursday after Nvidia posted profits far above expectations along with a strong business outlook, which had eased some investor concern about overvaluation in the artificial intelligence (AI) sector.
Indexes rose Friday in Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Jakarta and Taipei. Meanwhile, indexes fell in Seoul, Wellington and Manila.
On Wall Street Thursday, all three major U.S. stock indexes had risen, though the gains were largely driven by the tech sector. Of 11 major sectors, technology was the only one that rose that day.
Oil prices dipped slightly in international markets Friday. But with no resolution in sight to normalize the passage of oil tankers and cargo ships through the Strait of Hormuz, there are concerns oil prices could rise further.
U.S. officials have threatened to apply further economic pressure to force Iran to reopen the Strait of Hormuz. Tension over the critical waterway remains high amid a war that has now lasted six months.
Roughly one-fifth of the world’s total oil supply passes through the strait. A prolonged disruption to shipping there could have a major impact on global oil supply. Diplomatic efforts to resolve the Hormuz standoff have yet to produce a breakthrough.