Asian markets experienced a surge in trading activity on Thursday, with most indices posting gains following the U.S. Federal Reserve’s decision to implement a significant interest rate cut.

The Japanese Nikkei index led the charge, rallying as the yen weakened against the U.S. dollar. The Bank of Japan is also expected to announce its own key interest rate decision on Friday.

Other notable gainers included the S&P ASX 200 in Australia, which rose 0.2%, and the MSCI Asia ex-Japan index, which climbed higher.

The Fed’s move to cut rates by 50 basis points, marking its first reduction in over four years, was widely anticipated by traders. However, the size of the cut was larger than many had expected, with 63% of traders pricing in a 50 basis-point reduction, up from 47% last Friday.

Nikkei Rallies as Yen Retreats

The Japanese Nikkei index was one of the biggest beneficiaries of the Fed’s decision, rising 2% in early trading. This surge was aided by a decline in the yen against the U.S. dollar, as the Japanese currency weakened by more than 1% on Tuesday in anticipation of the Bank of Japan’s own policy announcement.

The yen’s retreat is seen as a positive for Japanese exporters, as it makes their products more affordable for overseas buyers. This, in turn, boosts the competitiveness of Japanese companies in global markets.

U.S. Stocks End Mixed, Dollar Rebounds

Wall Street ended Wednesday’s trading session with modest losses, as the S&P 500 and Nasdaq Composite closed lower despite briefly reaching record highs. The Dow Jones Industrial Average also declined slightly.

The U.S. dollar, which initially dropped following the Fed’s rate cut, bounced back and strengthened against other major currencies. This rebound was likely due to the Fed’s indication that it is in no rush to implement further cuts and will move at a pace it deems appropriate.

Gold Prices Flat After Record High

Spot gold prices were little changed at $2,558.00 per ounce on Thursday, after reaching a record high of $2,599.92 on Wednesday. U.S. gold futures fell 0.6% to $2,582.70.

The Fed’s decision to cut rates by a larger-than-expected margin initially boosted gold prices, as the precious metal tends to perform well in a lower interest rate environment. However, the subsequent strengthening of the U.S. dollar made gold more expensive for holders of other currencies, leading to a slight pullback in prices.

Oil Prices Decline

Oil prices fell in Asian trading on Thursday, with Brent crude futures for November dropping 34 cents, or 0.46%, to $73.31 per barrel. West Texas Intermediate (WTI) crude futures for October declined by 42 cents, or 0.59%, to $70.49 per barrel.

The decline in oil prices came despite the Fed’s rate cut, which had been expected to boost demand for crude. However, concerns about the potential impact of the rate cut on the U.S. economy may have weighed on oil prices.

Outlook for Further Fed Cuts

Following the Fed’s decision, Chair Jerome Powell stated that he does not see any indication of a recession or economic downturn on the horizon. However, he acknowledged that the central bank is prepared to move as quickly or slowly as it deems necessary to maintain economic stability.

Traders are currently anticipating a 68% chance of a 25 basis-point reduction in November and a 32% chance of a 50-basis-point cut, according to the CME FedWatch tool.