Asia ignored the Fed's hawkish signal: 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 conspicuously ignored Kevin Warsh's "hawkish" stance. Japan's Nikkei 225 and South Korea's KOSPI hit all-time highs, demonstrating remarkable resilience to global monetary tightening.
The Fed, at its first meeting under Warsh's chairmanship, left the base rate unchanged in the range of 3.5–3.75%. However, the updated dot plot turned out to be much more hawkish than expected: the median rate forecast for the end of the year rose to 3.8% from March's 3.4%. This means that most committee members now anticipate at least one rate hike by the end of the year.
Tech Drive and AI Boom
Asian markets opened on a positive note on Thursday. The Nikkei 225 surpassed the 71,000-point mark for the first time in history, while the Topix index also showed solid gains. The main catalyst for KOSPI was news from SK Hynix: the company's shares jumped 3.45% after announcing the delivery of trial samples of a new AI chip, HBM4E, to key clients, including Nvidia. Samsung Electronics also rose by 1.23%.
Significantly, the Asian market is driven by its own agenda, based on real tech demand rather than macroeconomic signals from Washington. While the S&P 500, Nasdaq, and Dow closed in the red, and the yield on two-year U.S. Treasury bonds surged by 16 basis points to 4.22%, Asia continued its rally.
Crypto Market Under Pressure
For the digital asset market, the Fed's policy shift means tangible changes. Bitcoin and other risk assets are highly sensitive to changes in global liquidity—monetary tightening creates significant pressure. While Asia is currently disregarding the Fed's signals, if Warsh does initiate a rate hike, the divergence in sentiment could quickly disappear.
My analysis: The Asian market is currently living in an "AI optimism bubble," which could burst at the first real rate hike. Crypto investors should prepare for increased volatility: if the Nikkei and KOSPI reverse course following Wall Street, Bitcoin could lose support from institutional risk appetite.