Asia Open: Muted start amid US post-Fed whipsaw

Wall Street Wrap

The post-Federal Reseve (Fed) meeting rally failed to hold into the close overnight, with US indices slipping marginally into the red. The Nasdaq fell 0.33%, the S&P 500 dipped 0.22%, and the Dow Jones edged down 0.03%. We may still argue that the formation of higher lows on the four-hour chart over the past week suggests that bulls are still attempting to drive for a short-term recovery.

In the recent Fed meeting, Fed Chair Jerome Powell did offer some reassurances about the economy, but the Fed’s economic projections painted a more concerning picture by highlighting rising stagflation risks. This contradiction may fuel doubts about the validity of Powell’s optimism and while his assertion that tariff-driven inflation is “transitory” aligns with price dynamics from the 2018 trade war, markets remain sceptical given his similar stance during the post-COVID inflation surge.

Notably, the Fed’s projections assume the implementation of tariffs, though the scale and timeline remain uncertain. While a recession is not inevitable, much depends on upcoming policy decisions from Trump.

For the S&P 500, the higher-low structure keeps near-term recovery hopes alive, but the 5,700 level remains a key resistance. The four-hour relative strength index (RSI) has reclaimed its midline for the first time in nearly a month, signalling potential bullish momentum. Any breakdown below the upward trendline connecting higher lows would invalidate this setup.

S&P 500 chart:

Asia session

Asian markets opened flat, with the Nikkei up 0.13%, the ASX rising 0.18%, and the KOSPI slipping 0.12%. The pullback in Chinese equities was the region’s key focus yesterday, likely driven by profit-taking after a strong rally since the start of the year. With the “Two Sessions” now behind us, market attention has shifted to looming tariff risks set to take effect in less than two weeks, which may prompt investors to adjust their positioning amid the uncertainty.

Despite near-term caution, the broader uptrend remains intact, supported by positive earnings revisions, inexpensive valuations, and government policy pledges to cushion economic downside risks—suggesting that buying on dips may still be the favoured approach. For now, the Hang Seng Index (HSI)'s daily RSI has returned to its midline, a key level that has held since January. A break below the secondary trendline could open the door to the 22,845 level next.

Hang Seng Index (HSI) chart:

Japan’s national core consumer price index (CPI) came in at 3.0%, slightly above the 2.9% consensus, indicating that underlying pricing pressures remain firm. While the headline figure has eased from a two-year high of 4.0% to 3.7%, persistent services inflation and rising wage growth suggest the Bank of Japan (BoJ) will stay on its rate-hiking path—albeit gradually—as policymakers assess tariff-related risks. Market expectations still point to a BoJ rate hike in July, followed by a pause for the remainder of the year.

SGD/JPY eyeing for a short-term bounce?

A look at the SGD/JPY shows the pair eyeing for a short-term bounce, with the pair overcoming its previous lower-highs-lower-lows structure. Support was found at the 110.43 level, which will have to see some defending. Further bounce may see the 114.00 level being retested, while longs may be invalidated on any dip back below the 110.43 level.

SGD/JPY chart: