Asia's Records Defying the Fed: Why Nikkei and KOSPI Ignore Walsh's Hawkish Signal
Asian stock markets have shown remarkable resilience, hitting record highs amid the strongest signal from the Federal Reserve since 1994. Japan's Nikkei 225 surpassed the 71,000-point mark for the first time in history, and South Korea's KOSPI also set a new record, ignoring the Fed's hawkish policy shift.
Asia Charts Its Own Course
While U.S. indices S&P 500, Nasdaq, and Dow Jones experienced their worst day since the Fed chair change in 1994, Asian markets opened with confident gains. The Nikkei 225 and Topix showed strong upward momentum, and the KOSPI hit an all-time high thanks to a 3.45% rise in SK Hynix shares — the company began supplying trial samples of its new AI chip HBM4E to key clients, including Nvidia. Samsung Electronics shares also rose by 1.23%.
At his first meeting, Kevin Warsh kept the base rate 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 3.4% in March. This means markets are now pricing in at least one rate hike by the end of the year — 9 out of 18 Fed committee members expect exactly this scenario.
Diverging Trends: What It Means for the Crypto Market
While U.S. markets are selling off and the yield on 2-year U.S. Treasury bonds surged by 16 basis points to 4.22%, Asia is showing complete indifference to Fed signals. However, such divergence cannot last forever. For the crypto market, which is highly sensitive to changes in global liquidity, monetary policy tightening creates significant pressure. Bitcoin and other risk assets traditionally react sharply to such signals.
My analysis: The current rally in Asia is more of a delayed reaction to domestic factors and technological optimism than a sustainable trend. If Warsh indeed initiates a rate hike, the divergence in sentiment will quickly disappear, and Asian markets may follow U.S. markets downward. For crypto investors, this is a signal for caution: the era of "easy money" is coming to an end, and markets may see a correction.