After a challenging start to Q2, Asian markets rose overnight as rate caution continues

Thursday saw gains in the majority of Asian equities, reversing some of the sharp losses of the previous two days, but sentiment remained shaky following a severe earthquake in Taiwan.

Any significant increase in regional stock prices was also constrained by conflicting signals on the United States' interest rate decreases, particularly in light of the Federal Reserve's upcoming remarks and the importance of the nonfarm payrolls report.

Nevertheless, a somewhat better Wall Street close overnight provided some encouraging signals for Asian markets. In Asian trade, U.S. stock index futures also increased.

Due to market vacations in China and Hong Kong, trading volumes in Asian markets were a little lower than usual.

Thursday saw a 1.5% increase in the Nikkei 225, which broke over the 40,000 mark following three days of losses. A combination of profit-taking and growing fears about more aggressive actions from the Bank of Japan caused the index to decline.

The Nikkei's gains on Thursday were mostly driven by export-oriented Japanese equities, which profited considerably from the yen's ongoing depreciation. Bets that U.S. interest rates would stay higher for a longer period while Japanese interest rates would only rise marginally hammered the yen.

After recording sharp losses in the first two trading days of the second quarter, broader Asian markets saw an uptick. Following a robust first three months of 2024, some profit-taking struck the majority of regional indices.

After Fed members, including Chair Jerome Powell, repeated that the central bank needs more evidence before relaxing policy and added that cuts will probably start this year, European equities futures are pointing to a roughly flat opening on Thursday.

Powell stated on Wednesday that recent data had not "materially changed the overall picture," leading markets to price in around 70 basis points of easing this year, or somewhat less than three quarter-point rate reduction.

(Sources: investing.com, reuters.com)