A currency trader monitors exchange rates in a trading room at KEB Hana Bank in Seoul on March 13, 2020.
JUNG YEON-JE | AFP via Getty Images
SINGAPORE – Asia-Pacific markets advanced broadly on Thursday, with investor reaction after the U.S. Federal Reserve’s policy-making committee voted to keep short-term lending rates close to zero, in a move widely expected.
The Nikkei 225 in Japan rose 1.58%, while the Topix index totaled 1.15%. South Korea’s Kospi was up 1.23% and Kosdaq was up 0.87%.
In Hong Kong, the Hang Seng index rose 1.15%, while the Singapore Straits Times index rose 0.97%.
Chinese mainland stocks advanced: the Shanghai compound rose 0.45%, while the Shenzhen component rose about 0.68%.
Australian stocks resisted the generally positive trend, with the ASX 200 benchmark falling 0.43%, as most sectors traded lower. However, the energy and material sub-indexes recovered from the losses of the previous session, with an increase of 0.37% and 0.24%, respectively.
US stocks rose overnight, pushing the Dow Jones Industrial Average to its first close above 33,000, while Treasury yields declined from previous highs.
Fed decision
The Fed raised its expectations for economic growth, but indicated that there is likely to be no increase in interest rates until 2023.
President Jerome Powell said he expects inflation to rise this year due in part to mild year-over-year comparisons since the early days of the Covid-19 pandemic in 2020. However, he said that will not be enough to change the policy he seeks inflation above 2% over a period of time, if it helps to achieve full and inclusive employment.
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 “point graph” of individual members’ forecasts. For 2023, seven members see an increase, compared to five in December.
Each quarter, FOMC members predict where interest rates will go in the short, medium and long term. These projections are represented visually in graphs and are called a plot plot.
“The FOMC statement was very similar to that of January,” strategists at the Commonwealth Bank of Australia wrote in a note on Thursday morning. “However, the Committee noted that activity and employment indicators have recently increased. However, the statement retained that the ongoing health crisis continues to pose” considerable risks to the economic outlook “and that current levels of accommodation policies remain adequate. “
“The combination of unchanged midpoint charts and President Powell’s dovish comments pushed USD and US bond yields down (after an increase in yields earlier in the day),” noted CBA strategists.
Coins and oil
In the foreign exchange market, the dollar fell against a basket of its peers, with the dollar index falling from levels close to 91.900 before the Fed’s decision to around 91.498 on Thursday during the Asian trading session.
The Japanese yen changed hands at 109.06 per dollar, weakening from an earlier level of around 108.69, while the Australian dollar rose 0.42% to $ 0.7827.
Oil prices fell on Thursday during the Asian trading session. US oil futures contracts fell 0.54% to $ 64.25 a barrel, while the Brent global benchmark index fell 0.54% to $ 67.63.
Energy prices plummeted overnight due to growing concerns about fuel demand and rising US inventories. In Europe, there are concerns that the economic recovery may be delayed after several countries have temporarily suspended the use of AstraZeneca’s Covid-19 vaccines due to concerns about possible side effects.
– CNBC’s Jeff Cox contributed to this report.