A foreign exchange dealer monitors exchange rates in a trading room at KEB Hana Bank in Seoul on March 13, 2020.
JUNG YEON-JE | AFP through Getty Images
SINGAPORE – Asia-Pacific markets advanced sharply on Thursday as investors reacted after the US Federal Reserve’s policy-making committee voted to keep short-term lending rates close to zero in a large-scale move.
Japan’s Nikkei 225 rose 1.58%, while the Topix index added 1.15%. Kospi in South Korea rose 1.23% and Kosdaq rose 0.87%.
In Hong Kong, the Hang Seng index rose 1.15%, while the Singapore Straits Times index rose 0.97%.
Shares of the Chinese mainland advanced: the Shanghai composite rose 0.45%, while the Shenzhen component rose about 0.68%.
Australian equities declined the overall positive trend, with the ASX 200 benchmark slipping by 0.43% as most sectors traded less. However, the energy and materials sub-indices recovered from the losses of the previous session to trade with 0.37% and 0.24% respectively.
US equities rose overnight, while the Dow Jones industrial average reached more than 33,000 at the first close, while Treasury yields fell from previous highs.
Fed decision
The Fed has boosted its expectations for economic growth, but has indicated that there may be no interest rate hikes until 2023.
President Jerome Powell said he expects inflation to rise this year, in part due to weak year-on-year comparisons in the early days of the 2020 Covid-19 pandemic. However, he said it would not be enough to change the policy of inflation above 2% for a period of time, if it helps to get a full and inclusive job.
Four of the 18 members of the Federal Open Market Committee were looking for a rate hike in 2022, compared to just one at the December meeting, according to the “plot point” of individual members’ forecasts. For 2023, seven members see an increase, compared to five in December.
Each quarter, FOMC members forecast where interest rates will go in the short, medium and long term. These projections are visually represented in diagrams and are called points.
“The FOMC statement was very similar to the January statement,” Commonwealth Bank of Australia strategists wrote in a note Thursday morning. “However, the Committee noted that activity and employment indicators have risen recently. However, the statement noted that the ongoing health crisis continues to pose” considerable risks to the economic outlook “and that current levels of employment policy accommodation remain adequate. “
“The combination of unchanged median plots with points and President Powell’s dovish comments pushed bond yields in the USD and US lower (following a rise in yields earlier in the day),” CBA strategists noted.
Coins and oil
In the foreign exchange market, the dollar fell against a basket of its colleagues, while the dollar index fell from levels of almost 91,900 before the Fed decision to 91,498 on Thursday during trading hours in Asia.
The Japanese yen changed hands at $ 109.06, weakening from a previous level around 108.69, while the Australian dollar rose 0.42% to $ 0.78827.
Oil prices fell on Thursday during trading hours in Asia. Gross US futures fell 0.54% to $ 64.25 a barrel, while Brent’s global benchmark fell 0.54% to $ 67.63.
Energy prices fell overnight due to growing concerns about fuel demand as well as rising US inventory. In Europe, there are concerns that the economic recovery could be delayed after several countries temporarily stopped using AstraZeneca’s Covra-19 vaccines due to concerns about possible side effects.
– CNBC’s Jeff Cox contributed to the report.