Finance

Asian shares gain after Fed chair signals slower rate hikes

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BANGKOK — Shares advanced in Asia on Thursday after a rally on Wall Street spurred by the Federal Reserve chair’s comments on easing the pace of interest rate hikes to tame inflation.

Signs that China may be shifting its approach to containing COVID-19 outbreaks to focus more on vaccinations also helped drive buying of shares across the region.

Tokyo’s Nikkei 225 index added 0.9% to 28,226.08 while the Hang Seng in Hong Kong advanced 1.4% to 18,859.73. The Shanghai Composite index climbed 0.5% to 3,166.23. In Seoul, the Kospi picked up 0.3% to 2,479.84. Australia’s S&P/ASX 200 gained 1% to 7,354.40.

Bangkok’s SET rose 0.9% a day after the central bank raised its key interest rate by a quarter point to 1.25%, aiming to curb inflation.

On Wednesday, Fed Chair Jerome Powell, said in comments at the Brookings Institution that the central bank could begin moderating its pace of rate hikes as soon as December, when its policymaking committee will hold its next meeting.

“We have a risk management balance to strike,” Powell said. “And we think that slowing down (on rate hikes) at this point is a good way to balance the risks.”

Stocks roared higher. The benchmark S&P 500 rose 3.1%, snapping a three-day losing streak and closing at 4,080.11. The Dow Jones Industrial Average gained 2.2% to 34,589.77 and the Nasdaq composite climbed 4.4% to 11,468.

Small company stocks also rallied. The Russell 2000 index rose 2.7% to 1,886.58.

More than 95% of the stocks in the S&P 500 advanced, led by technology companies. Apple rose 4.9% and Microsoft jumped 6.2%.

“The optimism in the market is that perhaps the worse is over for the U.S. in terms of inflation reading, and the Fed isn’t going to increase the interest aggressively,” Naeem Aslam of Avatrade said in a commentary.

Powell’s comments sent Treasury yields sharply lower. The yield on the 10-year Treasury dropped to 3.62% from 3.75% late Tuesday. The yield on the two-year note, which tends to track market expectations of future Fed action, fell to 4.34%. It was trading at 4.48% late Tuesday and had been as high as 4.53% shortly before Powell’s speech.

While citing some recent signs that inflation is cooling, Powell stressed that the Fed will push rates higher than previously expected and keep them there for an extended period to ensure inflation comes down sufficiently.

“History cautions strongly against prematurely loosening policy,” Powell said. “We will stay the course until the job is…

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