Stocks gain in Tokyo, Hong Kong, Shanghai
BEIJING — Asian stock markets gained Thursday after the Federal Reserve said the U.S. economy is moving toward lower inflation but more interest rate hikes are planned.
The Nikkei 225 NIK, 0.27% in Tokyo added 0.2%. The Hang Seng HSI, -0.22% in Hong Kong advanced 0.3% and the Shanghai Composite Index SHCOMP, -0.05% gained 0.2%.
The Kospi 180721, 1.14% in Seoul was 0.9% higher and Sydney’s S&P/ASX 200 XJO, +0.13% rose 0.3%. Stocks fell in Singapore STI, -0.50%, but gained in Taiwan Y9999, +1.14% and Indonesia JAKIDX, +0.33%.
Wall Street’s benchmark S&P 500 index SPX, +1.05% closed 1% higher on Wednesday after the Fed raised its key lending rate by 0.25 percentage points, a smaller margin than previous increases. Chair Jerome Powell said the “disinflationary process has started” but “ongoing increases” in rates will be needed.
Traders hope lower inflation following repeated rate hikes by global central banks will encourage them to scale down plans for more increases. Some expect a U.S. cut before 2024, though Powell said he anticipates no reductions this year.
Markets put a “dovish interpretation” on Powell’s comments despite his warning that it was too early to declare victory, said Venkateswaran Lavanya of Mizuho Bank in a report.
The gap between market pricing and Fed plans “appears to have widened,” Lavanya wrote. “This leaves room for a rude shock down the road.”
Following Powell’s news conference, the S&P recovered from an early loss to rise to 4,119.21, its highest close since August.
That appeared to encourage investors who worry the Fed and European central banks might be willing to push the global economy into recession to cool inflation that is near multi-decade highs.
“We can now say, I think for the first time, that the disinflationary process has started,” Powell said. He said his “base case” is that the Fed’s inflation target of 2% can be achieved “without a really significant downturn or really big increase in unemployment.”
The Dow Jones Industrial Average DJIA, +0.02% gained less than 0.1% to 34,092.96. The Nasdaq composite COMP, +2.00% jumped 2% to 11,816.32.
Wednesday’s announcement raised the Fed’s overnight lending rate to a 16-year high of 4.5% to 4.75%, up from close to zero early last year.
Data on Wednesday gave a mixed picture of the U.S. job market, a factor in inflation expectations.
Hiring has stayed resilient despite repeated rate hikes. While that helps workers, it adds to worries that wage gains could add to upward pressure on prices.
Private payrolls rose by 106,000 in January, according to ADP, a payroll processor. That was a smaller gain than the previous month and below forecasts.
A separate U.S. government report indicated more strength. It said the number of job openings increased to 11 million in December, better than expected.
In energy markets, benchmark U.S. crude CLH23, 0.85% rose 66 cents to $77.07 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.46 on Wednesday to $76.41. Brent crude BRNJ23, 0.72%, the price basis for international oil trading, added 61 cents to $83.45 per barrel in London. It lost $2.62 the previous session to $82.84 a barrel.
The dollar USDJPY, -0.27% fell to 128.55 yen from Wednesday’s 128.77 yen.