Asian markets opened weaker on Wednesday after Wall Street losses, with investors digesting cautious remarks from Federal Reserve Chair Jerome Powell on interest rates. The MSCI Asia-Pacific index outside Japan fell 0.2% early, following the S&P 500’s 0.6% drop—its largest one-day loss in three weeks. Japan’s Nikkei declined 0.4%, while Australian shares slid 0.7% ahead of key CPI data. U.S. futures remained flat.
The U.S. dollar stabilized after back-to-back declines, with the dollar index up 0.1% at 97.301. Against the yen, the greenback slipped 0.1% to 147.575. Analysts at Westpac noted Powell’s remarks stressed “upside risks to inflation and downside risks to employment,” underlining the Fed’s delicate balancing act.
Despite the pullback, Asian equities are still on track for their strongest month in a year, buoyed by regional tech strength, a softer U.S. dollar, and renewed expectations of Fed rate cuts. Fed funds futures now imply a 93% chance of an October cut, up from 89.8% the day before. U.S. Treasuries attracted buyers, pushing 10-year yields down to 4.1061%, while the 2-year yield eased to 3.5673%.
On the macro front, weaker U.S. PMI data from S&P Global highlighted slowing business activity for a second straight month, raising growth concerns. Citi analysts flagged underlying weakness, pointing to firms struggling to pass on higher costs due to subdued demand and competition.
In commodities, Brent crude rose 0.3% to $67.86 per barrel as delays in Iraqi Kurdistan oil exports eased oversupply fears. Meanwhile, spot gold dipped 0.1% to $3,760.90 per ounce after hitting a record high the previous day.
Global investors remain cautious, balancing Fed signals, soft U.S. data, and commodity price swings as markets await further economic cues.