Warsh Remarks Lift U.S. Nasdaq Futures 0.18%; Asian Stocks Also Rally on Relief (Update)

Fed Chair Kevin Warsh at Bangkok discussion
"AI to boost productivity and expand economic wealth"
No mention of rate hikes at October FOMC

U.S. Federal Reserve (Fed) Chair Kevin Warsh said investment in artificial intelligence (AI) would bring enormous benefits to the U.S. economy. Following his remarks, U.S. stock futures rose, and gains in Asian markets widened. The fact that Warsh did not signal a rate hike, despite U.S. inflation data coming in above Wall Street expectations, was also seen as a positive factor.

An electronic board in the dealing room at Hana Bank's headquarters in Jung-gu, Seoul, displays the KOSPI and KOSDAQ indexes and the won-dollar exchange rate on the morning of the 16th. Yonhap News

According to CNN on Friday, Nasdaq 100 futures were up 0.18% at 30,197.25 as of Friday afternoon. S&P 500 futures were up 0.15%, while Dow Jones 30 futures rose 0.12%.

Asian markets, which opened higher on Friday, also continued to advance. The KOSPI, which opened up 1.58% from the previous trading day, was up 3.44% as of Friday afternoon. The KOSDAQ was up 5.88%. China's Shanghai Composite Index was up 0.42%, while the Hang Seng Index rose 1.03%. Japan's benchmark Nikkei 225 index was also up 1.88%.

Speaking with International Monetary Fund (IMF) Managing Director Kristalina Georgieva at the IMF-World Bank (WB) Annual Meetings in Bangkok, Thailand, on Friday, Warsh struck an optimistic note, saying AI would boost productivity and expand economic wealth over the long term. However, he warned that the process would be "very bumpy" and said its short-term impact on employment was unknown.

Warsh did not make specific comments on monetary policy or the U.S. economic outlook, but Bloomberg reported that the probability of a Fed rate hike in October fell to 15% after his remarks. It had been above 25% the previous day.

Charu Chanana, chief investment strategist at Saxo Markets, told Bloomberg, "Some bets on a Fed rate hike are being unwound, as Warsh did not commit to further rate increases." She added, "After inflation data came in stronger than expected, his comment that he 'does not prejudge the outcome of meetings' is not helping the dollar."

U.S. inflation data released earlier this week, which came in above expectations, heightened market concerns. The core Consumer Price Index (CPI) rose 0.33% month over month in September, marking a high rate of increase for the second consecutive month. Producer price data released on Thursday was also strong, drawing attention to the possibility of further Fed tightening.

The Federal Open Market Committee (FOMC) meeting will take place less than a week before the U.S. midterm elections in November. The Wall Street Journal (WSJ) noted that either a rate hike or a hold by the Fed could spark political controversy.

Meanwhile, Warsh also announced that he would hold an in-person hearing in the San Francisco Bay Area on November 16 to discuss AI's effects on productivity and employment. In June, Warsh established five external expert task forces to study key areas related to monetary policy. The task forces are expected to submit policy recommendations to the Fed by the end of this year.

This content was produced with the assistance of AI translation services.