Asia stocks rise after Fed chair downplays bigger rate hike

BEIJING

Wall Street rose on Thursday, as Asian stocks followed Wall Street’s lead. The Federal Reserve chairman downplayed the possibility of larger rate hikes after the U.S. central banks largest increase in 20 years.

Shanghai, Hong Kong, and Sydney all advanced. For holidays, markets in Japan and South Korea were closed.

Wall Street’s benchmark S&P 500 index climbed 3% on Wednesday for its best day in two years after the Fed raised its key interest rate by half a percentage point, or double its usual margin, but its chairman Jerome Powell said the U.S. central bank is “not actively considering” a bigger increase.

“The Fed continues to try and orchestrate a soft landing while tackling high levels of inflation,” David Chao of Invesco saidIn a report

The Shanghai Composite Index rose 0.9% to 3,072.98, while Hong Kong’s Hang Seng increased 0.6% at 21,004.37. Sydney’s S&P-ASX 200 advanced 0.7% to 7,358.00.

India’s Sensex gained 1.3% to 56.388.83. New Zealand was ahead of Singapore and Bangkok, which both declined.

The Fed raised its key rates to a range from 0.75% to 1.1%, the highest rate since the coronavirus epidemic two years back.

Powell’s comments seemed to be intended to ease fears that the Fed, which was accused last year of responding too slowly to inflation spikes, may be heading for an unusually high rate hike of three quarters of a percent at its June meeting.

Investors are concerned about whether the Fed will be able to end inflation without causing a recession.

The Fed provided details on how it would reduce its Treasury debt and mortgage-backed security holdings. To pump money into the financial sector and lower long-term interest rates, the central bank has been purchasing bonds.

Powell saidThe U.S. economy is capable of surviving rate increases without entering recession.

“The economy is strong and well positioned to handle tighter monetary policy,” Powell said. “It’s not going to be easy.”

Wall Street’s S&P 500 rose to 4,300.17. The Dow Jones Industrial Average increased 2.8% to 34.061.06. The Nasdaq composite rose 3.2% to 12,964.86.

Roughly 85% of the stocks in the S&P 500 rose. The gains were largely attributable to tech companies. Apple rose 4.1%

Energy stocks were among the biggest gainers after Europe moved a step closer to placing an embargo on Russian oil in response to Moscow’s war on Ukraine. An embargo on oil would cause prices to rise, which would give a boost to other suppliers. Exxon Mobil saw a 4% increase.

Thursday’s benchmark crude oil price rose 35 cents, to US$108.16 a barrel in electronic trading at the New York Mercantile Exchange. On Wednesday, the contract rose $5.40 to $107.81. Brent crude oil, which is the price basis of international oils, rose 56 cents to $110.70 a barrel in London. It rose $5.17 to $110.14 from the previous session.

From Wednesday’s 128.87 Japanese yen, the dollar rose to 129.38 Japanese Yuan. From $1.0613 to $1.0618, the euro rose $1.0618 to $1.0618.