Most stocks rise on Fed rate cut hope but strong yen batters Tokyo

HONG KONG, China — Most equity markets rose Thursday after the Federal Reserve flagged a possible interest rate cut next month, but Tokyo's Nikkei tumbled on a stronger yen following a hike by the Bank of Japan.

US central bank boss Jerome Powell said decision-makers were increasingly confident inflation and the economy were at a point where they could start loosening monetary policy.

After a highly anticipated two-day meeting where borrowing costs were kept at 23-year highs as expected, he told reporters the first reduction could come "as soon as" September if data continued to improve.

"The broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate," he said, adding there had been a "really significant decline in inflation."

His remarks follow a string of reports suggesting that prices were being brought under control and the labour market was softening. He also told lawmakers this month that inflation did not need to hit the Fed's two percent target before that cut.

Traders are now fully pricing in a reduction in September and almost two more before the end of the year.

"We continue to expect that the Federal Reserve will cut rates in September and December, followed by four 25 basis point reductions in 2025," said JP Morgan Asset Management's Raisah Rasid.

However, she added a word of warning in her commentary.

"Investors should be mindful of potential risks, which at times are underestimated, including the possibility of a sharper growth deceleration and the impact of geopolitical uncertainties on the growth backdrop."

And Jeff Klingelhofer at Thornburg Investment Management was also cautious, writing: "The market is assuming a September cut is a 100 percent certainty, but this is wrongheaded.

"I'm sure the Fed wants to cut but there are still two inflation prints before September, so one bad piece of data could derail efforts."

The prospect of US borrowing costs coming down in around six weeks' time sent Wall Street's three main indexes surging, and most of Asia followed suit.

Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta were all in the green.

Howeve