Asian Markets Rise as Chip Stocks Boost Sentiment After Fed Pauses Rates

GLOBAL MOOD:  Cautiously risk on
Drivers: US Fed Rate Pause and Comments, Semiconductor Optimism, Geopolitical Risks

Asian markets traded with a cautious to mixed tone today, as investors digested the Federal Reserve’s decision to keep interest rates unchanged and assessed renewed geopolitical tensions in the West Asia. The Nikkei 225 rose 0.2% to about 53,500 on Thursday, gaining for a third straight session as chip and memory stocks followed Wall Street's lead. However, gains are likely capped by lingering concerns over global trade dynamics and heightened geopolitical risk, keeping positioning cautious across most Asian bourses.

TODAY’S WATCHLIST

• Oct-Dec Earnings: Vedanta, Adani Power, ITC
• US November Trade Data
• US Weekly Initial Jobless Claims

THE BIG STORY
The US Federal Reserve kept interest rates unchanged at 3.50%–3.75% on Wednesday, signalling patience on further easing as policymakers assessed a US economy that Chair Jerome Powell described as “solid” and resilient. The decision passed by a 10–2 vote, with Governors Christopher Waller and Stephen Miran dissenting in favour of another 25-basis-point cut. Powell said the Fed is “well-positioned” to wait for clearer signals, noting that upside risks to inflation and downside risks to employment have both diminished since December, even if they have not disappeared. Economic activity continues to expand at a steady pace, job gains remain modest, the unemployment rate has stabilised, and inflation is still somewhat elevated, reinforcing the case for a prolonged pause rather than an imminent rate cut.

Alongside the Fed’s cautious stance, geopolitical tensions resurfaced after President Donald Trump warned Iran to return to nuclear negotiations or face a more severe US response, prompting Tehran to threaten retaliation against the US, Israel and their allies.

Data Spotlight
US crude oil inventories fell by 2.296 million barrels in the week ended January 23, defying market expectations for a 1.75-million-barrel build and pointing to tighter near-term supply conditions. Crude stocks at the Cushing, Oklahoma delivery hub also declined by 278 thousand barrels, reinforcing signs of localised tightening. In contrast, gasoline inventories rose by a modest 224 thousand barrels, far below forecasts for a 1.3-million-barrel build, while distillate stockpiles increased by 329 thousand barrels, against expectations for a draw.

Takeaway:

The sharper-than-expected crude draw, coupled with muted builds in refined products, signals near-term tightening in US oil balances, lending support to crude prices despite broader supply concerns.

WHAT HAPPENED OVERNIGHT

US stocks mixed as Fed pause meets AI-led strength

• US stocks finished mixed after the Fed held rates steady, in line with expectations.
• S&P 500 briefly crossed 7,000 for the first time, but ended marginally lower alongside the Dow, while Nasdaq 100 rose 0.2%, supported by strength in semiconductor stocks.
• Texas Instruments surged 9.9% after beating estimates, lifting chip peers.
• Micron and Intel jumped 6.1%–11%, also helped by strong ASML order commentary, while AT&T gained 4.7% following results
• Microsoft, Meta and Tesla were subdued ahead of earnings after the close.

US Treasury yield stay elevated after Fed holds rates, dissent flags cut debate

• The benchmark US 10-year Treasury yields held above 4.25%, near the five-month high of 4.30% after Fed kept policy rates unchanged, as widely expected.
• Two FOMC members dissented in favour of a 25 basis point cut, including Governor Waller.
• Statement highlighted balanced risks to growth and inflation, offering no clear forward guidance.
• Markets continue to price two rate cuts by year-end.

US Dollar rebounds after Fed holds rates, signals patience on cuts

• The US dollar index jumped 0.8% to 96.67, rebounding from a nearly three-year low as Fed kept rates unchanged, citing still-elevated inflation and resilient growth.
• Policy statement offered little guidance on timing of future rate cuts.
• Dollar gained 1.1% vs yen to 153.90 after recent heavy selling.
• Earlier weakness was driven by Trump’s remarks downplaying the dollar’s slide.

Crude oil prices climbs to four-month high on Iran risk, weak dollar

• Brent crude prices settled up 1.2% at $68.40/barrel; WTI gained 1.3% to $63.21/barrel.
• Prices hit the highest levels since late September as Iran supply concerns continued to underpin risk premiums.
• Weaker US dollar added support to commodities.

Day’s Ledger

Economic Data

• Eurozone Consumer Confidence Data
• US November Trade Data
• US Weekly Initial Jobless Claims

Corporate Actions

• Oct-Dec Earnings: Adani Power, Blue Star, Canara Bank, Colgate Palmolive (India), Container Corporation, Coromandel International, Dabur India, Dixon Technologies, HUDCO, ITC, KPIT Technologies, NTPC Green, One 97 Communications, Prestige Estates, REC, Swiggy, Vedanta, Voltas

Policy Events

• ECB Donnery‘s Speech
• ECB Cipollone’s Speech

Tickers to Watch

• Mahindra Finance Q3FY26 results: Net profit falls 10% to ₹8.26 billion
• ACC Q3FY26 results: Net profit plunges 63% to ₹4.04 billion, revenue up 8.56%
• L&T Q3FY26 results: Profit falls 4% to ₹32.15 billion on Labour Codes' costs
• SBI Life Insurance's Q3FY26 results: Net profit rises 5% to ₹5.77 billion
• SBI Card Q3FY26 results: Profit jumps 45% to ₹5.57 billion, revenue up 11%
• ACC Q3FY26 results: Net profit slumps 63% to ₹4.04 billion; revenue jumps 22%
• Maruti Suzuki Q3FY26 results: Profit up 4.1% to ₹38.79 billion, sales jump 21%
• RBI should include liquid papers in OMOs for better yield signalling: SBI
• HAL aims for 25% civil aviation revenue share in 10 years, says CMD

Must Read

• When Disclosure Meets Discipline: Recasting India’s Financial Regulatory Architecture
• Why Carbon Markets Are Failing the World’s Farmers and What Budget Can Do About It
• The Snack Boom Is India’s Tobacco Moment
• India’s Green Bond Story: Why the Budget Matters More Than Ever
• IBC transformed insolvency landscape, but challenges remain: DFS secretary
• India-EU trade pact: India offers 30% duty reduction on imported wine
• Govt on 'reforms express' path; GST 2.0 saved ₹1 trillion: President Murmu
• Corporates return to loans; wholesale credit rises for private banks in Q3
• India allows European Union banks to open 15 branches in four years
• India's credit growth to be 10-12% CAGR over next 5 yrs: Brickwork Ratings

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

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