Asia’s major stock indexes rallied on Thursday with investor mood high after the US Fed gave its strongest signal yet this year that it was ready to U-turn on interest rates soon.
Shares across the region followed the S&P 500 to record highs after the US central bank confirmed inflation moving down gradually, opening the door to rate cuts with the next few months.
The Nikkei index extended its winning streak to three trading days, closing at a fresh record high boosted by optimism about the US economy.
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The Nikkei share average was up 2.03%, or 812.06 points, to close at 40,815.66, while the broader Topix was ahead 1.64%, or 45.24 points, to 2,796.21 – its highest level since January 1990.
Japanese financial markets were closed on Wednesday for a national holiday and the gainers were led by pulp and paper, wholesale trade and bank issues.
China stocks slipped, signalling potential fatigue in their six-week rebound, while Hong Kong shares tracked regional markets higher.
The Shanghai Composite Index dipped 0.08%, or 2.57 points, to 3,077.11, while the Shenzhen Composite Index on China’s second exchange edged back 0.13%, or 2.30 points, to 1,804.31.
China’s blue-chip CSI300 index was down 0.12%, with the healthcare sub-index falling 0.68%. However, the financial sector sub-index rose 0.5%, while consumer staples sector logged a marginal 0.04% increase. Meanwhile, real estate outpaced the others with a 1.1% increase
In Hong Kong, the benchmark Hang Seng Index gained 1.93%, or 320.03 points, to 16,863.10, following in the trail of US peers. A sub-index tracking energy shares rose 1.5% while the IT sector rose 0.89%.
Elsewhere across the region, in earlier trade, Seoul, Sydney, Mumbai, Singapore, Taipei, Bangkok, Wellington, Manila and Jakarta were all higher. MSCI’s broadest index of Asia-Pacific shares outside Japan jumped 1.6%.
US Treasuries Rally
EuroSTOXX 50 futures rose 1.2% and FTSE futures rose 0.9%. Central bank meetings in Switzerland, Norway, Britain and Turkey are scheduled later in the session.
The Fed left US rates on hold between 5.25% and 5.5% on Wednesday, as expected, and nudged up inflation forecasts. But policymakers’ median projection for three 25 basis point rate cuts this year was unchanged from December.
Fed Chair Jerome Powell told reporters sticky inflation reports show price pressures but “haven’t really changed the overall story, which is that of inflation moving down gradually”.
US Treasuries rallied, before steadying in Asia with two-year yields at 4.60% and 10-year yields at 4.27%. Fed members’ long-run rate projections ticked higher to 2.6% from 2.5%, with seven policymakers projecting long-run rates over 3% – up from four in December.
In foreign exchange markets, the prospect of cuts weighed on the dollar, which together with renewed warnings of possible official intervention from Japan lifted the yen from near multi-decade lows to 150.45 per dollar.
The euro traded to a week high of $1.0939 in Asia. The Australian dollar also jumped to a one-week high after a startlingly strong jobs report quashed talk of early policy easing.
Brent crude futures, up 5.6% in little more than a week on supply concerns were up 0.6% at $86.47 a barrel.
Key figures
Tokyo – Nikkei 225 > UP 2.03% at 40,815.66 (close)
Hong Kong – Hang Seng Index > UP 1.93% at 16,863.10 (close)
Shanghai – Composite < DOWN 0.08% at 3,077.11 (close)
London – FTSE 100 > UP 0.87% at 7,804.48 (0934 GMT)
New York – Dow > UP 1.03% at 39,512.13 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
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