Investing.com - Asian-Pacific markets are experiencing a positive opening on Thursday, following a robust session on Wall Street that saw all three major indexes close higher.
The S&P/ASX 200 was up 1% as of 10:30 am AEDT (11:30 pm GMT), while Nikkei 225 Futures were flat.
Global investors are focusing their attention on the Federal Reserve for insights into whether the recent unusual increase in Treasury yields could help the U.S. combat inflation. The central bank's response, which suggested a potential role for the yields, was sufficient to boost stocks on Wednesday. The Dow Jones Industrial Average rose by 0.7%, while the Nasdaq Composite and the S&P 500 increased by 1.6% and 1.1%, respectively.
A shift in investor preference has been observed over the past three months as Treasury yields have risen, drawing investors towards the approximately 5% returns offered by bonds and away from equities. This dynamic experienced a temporary reversal on Wednesday.
The yield on benchmark 10-year Treasury notes began to decrease after the Treasury Department announced a smaller-than-expected increase in the size of future long-term U.S. debt auctions. The yields fell further after the Federal Reserve decided to maintain interest rates at 22-year highs.
Federal Reserve Chair Jerome Powell stated that the recent surge in bond yields could potentially affect the robust U.S. economy by increasing borrowing costs, which in turn could alleviate price pressures. This could influence the central bank's monetary policy direction in the future.
As Treasury yields have been on the rise, some bond traders have been trying to time the market to capitalize on peak returns. However, others are taking Powell's warnings about potential additional rate hikes more seriously.
The decline in yields on Wednesday provided an opportunity for the 'Magnificent Seven' stocks, including Meta and Nvidia, both of which saw more than 3.5% gains. Advanced Micro Devices (NASDAQ:AMD), a tech stock aligned with artificial intelligence, saw shares leap by 9.7% after the company forecast strong sales of advanced AI chips for the next year.
Investors have been scrutinizing companies' projections for the third quarter, seeking insights into how they plan to navigate the uncertain U.S. economic landscape. Despite many companies surpassing Wall Street's earnings estimates, the focus remains on the future.
In the commodities market, Brent crude oil dipped by 0.1% to US$84.90 a barrel, while gold remained steady at US$1,982.72. The Australian dollar rose against the US dollar, reaching 63.89 US cents from a previous close of 63.36. The US Dollar Index was at 106.6.
Mixed results were seen in Chinese shares, with the Shanghai Composite Index closing 0.1% higher, while the Shenzhen Composite Index and the ChiNext Price Index dropped by 0.1% and 0.5%, respectively.
Japanese stocks ended on a high note, led by companies posting strong results. The Nikkei Stock Average rose 2.4% to 31601.65, with investors keeping an eye on the U.S. central bank's rate decision.
Indian shares closed lower, dragged down by metal and power stocks. Despite the recent market correction, ANZ analysts predict that the dip will be short-lived, with Indian shares likely to trade at a premium to regional peers given the country's economic growth momentum and favourable business environment.
European stocks experienced mixed trading, with the Stoxx Europe 600 rising by 0.1%, and the DAX and CAC 40 remaining largely unchanged. Investors are awaiting the Federal Reserve's interest rate decision, with any comments signalling higher-for-longer rates likely to support the US dollar.