Asia ignores the hawkish signal from the Fed: Nikkei and KOSPI storm to historic highs
While the American market experienced one of its worst days since the Fed leadership change in 1994, Asian indices showed remarkable resilience, hitting new all-time highs. Kevin Warsh, at his first meeting, left the rate unchanged in the range of 3.5–3.75%, but the updated dot plot turned out to be much more hawkish than expected. The median rate forecast for the end of the year was raised to 3.8% from March's 3.4%, a clear signal of a continued hawkish stance.
Nikkei and KOSPI: Ignoring Global Pessimism
On Thursday, Asian markets opened with strong gains. Japan's Nikkei 225 crossed the 71,000-point mark for the first time in history, and the Topix index also showed positive momentum. South Korea's KOSPI updated its all-time high amid a strong rally in SK Hynix shares (+3.45%), driven by news of shipments of trial samples of the new HBM4E AI chip to key clients, including Nvidia. Samsung Electronics shares also rose by 1.23%, supporting the overall positive backdrop.
Hawkish Fed Signal: Pressure on Risky Assets
While Asian indices celebrated, the American S&P 500, Nasdaq, and Dow Jones notably declined. All 11 sectors of the S&P 500 closed in the red by the evening of June 17, and the yield on 2-year US Treasury bonds jumped 16 basis points to 4.22%. This is a classic reaction to monetary policy tightening.
Kevin Warsh refrained from specific forecasts about the future course, which only heightened uncertainty. Currently, 9 out of 18 Fed representatives expect at least one rate hike by the end of the year. For the cryptocurrency market, such a shift means tangible changes. Bitcoin and other risky assets are extremely sensitive to changes in global liquidity, and monetary tightening creates significant pressure.
While Asia is currently disregarding the Fed's signals, this divergence in sentiment cannot last forever. If Warsh does initiate a rate hike, a correction in Asian markets could be as swift as their current rally.
My view: The current rally in Asia is more of a local effect, supported by corporate news and a weak yen, rather than a fundamental disregard for global macroeconomic risks. Crypto investors should closely monitor the dynamics of US Treasury yields: if they continue to rise, pressure on BTC and altcoins will intensify, despite the positive sentiment in Asia.