Asian Markets Rally, Nikkei Hits New Record on Fed Signals
Asia-Pacific stock markets opened higher on Thursday (18/6/2026), even as market participants digested the latest meeting results from the US central bank, the Federal Reserve. The market gains came after the Fed maintained its benchmark interest rate but signalled that rate hikes could still occur this year.
US stock futures moved higher in overnight trading on Wednesday. S&P 500 futures rose 0.2%, Nasdaq 100 futures gained 0.4%, while Dow Jones Industrial Average futures added 73 points, or just over 0.1%.
In Asia, South Korea’s Kospi index surged 0.89% to hit a new record high. Tech giant SK Hynix soared 3.45% to an all-time high, while Samsung Electronics rose 1.23%, even as the small-cap Kosdaq index fell 0.5%.
The Japanese market also posted an impressive performance, with the Nikkei 225 index climbing 1.35% to breach the 71,000 level for the first time in history. The Topix index also strengthened by 1.27%, while Australia’s benchmark S&P/ASX 200 index traded relatively flat.
Meanwhile, Hang Seng futures in Hong Kong were at the 24,200 level, lower than the previous close of 24,312.16, indicating potential weakness at the market open.
Investor attention was focused on the results of the Federal Reserve meeting led by the new Fed Chair, Kevin Warsh. At the meeting, the US central bank decided to maintain the federal funds rate in the 3.5%-3.75% range.
Although rates were unchanged, the latest projections from Fed officials showed a more hawkish tilt. Through the updated dot plot, several officials now expect interest rates to be higher by the end of 2026, with the median estimate rising to 3.8% from the previous 3.4% projection in March.
The projections indicate the possibility of at least one rate hike in 2026. However, the policy outlook became more complex after Kevin Warsh chose not to submit his personal interest rate projection.
The market reaction to the Fed meeting results was negative during Wednesday’s trading session. The Dow Jones index, which had briefly hit a new intraday record, ultimately closed down 507.12 points, or 0.98%, while the S&P 500 fell 1.21% and the Nasdaq Composite corrected 1.34%.
In the bond market, US government bond yields surged following the monetary policy announcement. The two-year Treasury yield even briefly touched the 4.22% level, reflecting expectations of higher interest rates ahead.
Carson Group Chief Macro Strategist Sonu Varghese assessed that while the Fed held rates steady, it successfully shifted market sentiment through its more hawkish projections. He noted that persistently high inflation makes this stance understandable, although policymakers are still not fully aligned on the direction of the next rate move. He also judged that current monetary policy remains relatively loose for an economy where inflation is still a problem, even as the labour market shows signs of stabilisation.
Jefferies Chief Market Strategist David Zervos commented that markets generally dislike regime changes or leadership transitions in economic policy.
On Thursday, investors will also scrutinise a number of US economic data points. In addition to earnings reports from Accenture and Kroger before the market opens, market participants await the release of the May leading economic indicator, the Philadelphia Fed manufacturing index for June, and weekly jobless claims data for the week ending 13 June.