Commercial and residential buildings in the Minato district of Tokyo, Japan, on Saturday, Oct. 1, 2022.
Akio Kon | Bloomberg | Getty Images
Asia-Pacific markets are set to open higher on Tuesday, after Federal Reserve Chair Jerome Powell indicated the recent outsized cuts enacted by the U.S. central bank should not be interpreted as a sign that future moves will be as aggressive.
“This is not a committee that feels like it’s in a hurry to cut rates quickly,” he said during a Q&A period following his speech with Morgan Stanley economist Ellen Zentner. “If the economy performs as expected, that would mean two more rate cuts this year, a total of 50 [basis points] more.”
The current federal funds rate stands at 4.75%-5%, with the expected additional 50 basis points in cuts set to take the Fed’s benchmark interest rate to 4.25%-4.5% at the end of 2024.
In Asia, traders will focus on the Bank of Japan’s Tankan survey, which measures the level of business optimism among large Japanese companies.
Business optimism among large Japanese manufacturers came in at +13, unchanged from the quarter before and in line with forecasts from a Reuters poll. Separately, sentiment among large non-manufacturers in Japan improved, inching up to +34 from +33 in the second quarter and beating Reuters expectations of +32. A positive figure indicates that optimists outnumber pessimists, and vice versa.
Japan also reported its unemployment rate for August eased to 2.5%, down from 2.7% in July and lower than the 2.6% is expected by economists polled by Reuters.
Some Asian markets are closed for a public holiday Tuesday, namely, South Korea, Hong Kong and mainland China. Mainland China will be closed for the rest of the week, due to the Golden Week holiday.
Futures for Australia’s S&P/ASX 200 stood at 8,274, slightly higher than its last close of 8,269.8.
Japan’s Nikkei 225 futures pointed to a rebound after the market tumbled 4.8% on Monday, with the futures contract in Chicago at 38,355 and its counterpart in Osaka at 38,210 compared to the previous close of 37,919.55.
Overnight in the U.S., the S&P 500 rose to a record close on Monday, concluding a winning month and quarter. The index recorded a 0.42% gain to close at 5,762.48.
The Dow Jones Industrial Average also closed at a new record, gaining marginally to close at 42,330.15. The tech heavy Nasdaq Composite advanced 0.38%
—CNBC’s Alex Harring and Hakyung Kim contributed to this report.
