The Zhitong Finance App learned that in order to cope with continued stubborn high inflationary pressure, the Federal Reserve has kept interest rates unchanged for the 6th time in a row, while the US dollar appreciated by more than 4% against other regional currencies (whether developed or emerging markets), which is the complete opposite of the situation where the market expected the Fed to cut interest rates and the dollar fell at the beginning of the year. Economic analysts at the smart investment platform StashAway believe that the Federal Reserve's delay in cutting interest rates is actually not as bad as imagined. Investors can focus their thinking on “when to cut interest rates” and “how much interest rates will be cut” rather than “whether interest rates will be cut in the end”. As the US begins to cut interest rates, investors may see an increase in capital flows as cash flow increases, thereby benefiting emerging markets in Asia.

Economic analysts at StashAway pointed out that the US economy showed an unexpectedly strong performance. Although the market has always anticipated a chance for the US to fall into recession, the US economic performance recorded 2.5% growth last year. Economic analysts at StashAway expect the US economy to grow by another 2.7% this year, far more than double the growth rate of other G7 countries, while the economic growth rate of Europe and Japan is only about 0.8% to 0.9%, which will undoubtedly stimulate market demand for the US dollar.

Furthermore, the US inflation problem is still serious. Not only has it failed to fall back to the Fed's 2% target, but the inflation rate in recent months has even exceeded expectations, causing the Federal Reserve to delay interest rate cuts, further boosting the US dollar's performance. Furthermore, the geopolitical situation remains tense and continues to cause concern in the market. Investors have turned to investing in safe-haven assets such as gold and the US dollar, further boosting the US dollar's performance.

The above favorable factors led to the appreciation of the US dollar, and high interest rates eventually made international investors continue to prefer to hold the US dollar; the futures market as a whole is optimistic about the US dollar and is bearish on other major currencies, which is in stark contrast to the expected decline in the US dollar at the beginning of the year.

Economic analysts at StashAway believe that the current performance of the US economy continues to be strong, and there is no need for the Federal Reserve to cut interest rates in a hurry. In fact, although the inflation rate remains high, as long as the US economy remains strong, it is beneficial to corporate profits and stock market performance. The reason is that moderate inflation has a positive impact on stock market performance. Looking back at historical data, the annual inflation rate of the S&P 500 index remains in the range of 3% to 5% (comparable to the current inflation rate), while the average return rate is still 8.5%, which indicates that the economy is recovering.

In view of strong GDP data in the Asia-Pacific region, Asian stock market performance is rising sharply. First, Indonesia's GDP grew strongly by 5.1% in the first quarter, exceeding expectations, which in turn boosted the performance of the Jakarta Stock Exchange and the rupee. As for Taiwan's economic performance, the GDP growth rate in the first quarter of this year was as high as 6.5% due to surging demand for technology; at the same time, the Malaysian stock market experienced the largest inflow of foreign investment in two years, driving its index to a 52-week high. As the US begins to cut interest rates, investors may see an increase in capital flows as cash flow increases, thereby benefiting emerging markets in Asia.