A currency trader monitors exchange rates in a trading room at KEB Hana Bank in Seoul on 13 March 2020.
JUNG YEON-JE | AFP via Getty Images
SINGAPORE – Asian and Pacific markets advanced sharply on Thursday as investors reacted after the US Federal Reserve’s policy committee voted to keep short-term loans in a generally expected move.
The Nikkei 225 in Japan rose 1.58% while the Topix index added 1.15%. South Korea’s Kospi climbed 1.23% and the Kosdaq 0.87%.
In Hong Kong, the Hang Seng Index rose 1.15% while the Singapore Straits Times Index rose 0.97%.
Chinese mainland shares advanced: the Shanghai composition rose 0.45%, while the Shenzhen component rose 0.68%.
Australian equities were generally positive, while the ASX 200 benchmark fell 0.43% as most sectors traded lower. However, the sub-indices for energy and materials recovered from losses in the previous session to trade 0.37% and 0.24% respectively.
U.S. stocks rose overnight, while the Dow Jones industrial average rose to its first level above 33,000, while treasury yields eased from earlier highs.
Fed decision
The Fed has raised its expectations for economic growth, but indicated that there are unlikely to be any interest rate hikes until 2023.
Jerome Powell, chairman, said he expected inflation to rise this year, in part because of soft year-on-year comparisons from the early days of the Covid-19 pandemic in 2020. However, he said that was not enough will be to change the policy pursued. inflation for more than 2% for a period if it helps to achieve a complete and inclusive work.
Four of the 18 Federal Committee members open-market members were looking for an interest rate hike in 2022, compared to just one at the December meeting, according to the ‘point plot’ of individual members’ forecasts. For 2023, seven members see a hike, compared to five in December.
FOMC members predict each quarter where interest rates will go in the short, medium and long term. These projections are visually represented in maps and are called a dot plot.
“The FOMC statement is very similar to that of January,” Commonwealth Bank of Australia strategists wrote in a letter on Thursday morning. “The committee noted, however, that activity and employment indicators have recently risen. Nevertheless, the statement said that the ongoing health crisis continues to pose ‘significant risks to the economic outlook’ and that current levels of policy accommodation remain appropriate.”
“The combination of unchanged median dots and President Powell’s dull remarks lowered yields on U.S. and U.S. bonds (after an increase in yields early in the day),” the CBA strategists noted.
Currencies and oil
In the foreign exchange market, the dollar tumbled against a basket of its peers as the dollar index fell from levels near 91,900 before the Fed’s decision to about 91,498 during Asian trading hours on Thursday.
The Japanese yen changed hands from 109.06 per dollar, weakening from an earlier level of around 108.69, while the Australian dollar rose 0.42% to $ 0.7827.
Oil prices fell during Asian trading hours on Thursday. U.S. crude futures fell 0.54% to $ 64.25 a barrel, while global benchmark Brent fell 0.54% to $ 67.63.
Energy prices fell overnight due to growing concerns about fuel demand as well as rising US inventories. In Europe, there are concerns that economic recovery could slow down after several countries temporarily halted the use of AstraZeneca’s Covid-19 vaccines due to concerns about possible side effects.
– CNBC’s Jeff Cox contributed to this report.