© Reuters. ARCHIVE PHOTO: Senate Banking Committee Hearing at Capitol, Washington
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By Stanley White and Elizabeth Dilts Marshall
TOKYO / NEW YORK (Reuters) – Asian equities and U.S. futures rose on Thursday after the Federal Reserve pledged to maintain accommodative monetary policy and projected a rapid jump in US economic growth this year, as that the COVID-19 crisis was easing.
The broader MSCI index for Asia-Pacific stocks outside Japan rose 0.87%, while China’s stocks rose 0.74%. The Australian market resisted the trend and fell 0.73%.
E-mini futures for the market rose 0.7%.
rose 0.52%, the Germans rose 0.75% and futures rose 0.4%, indicating a brilliant start to European negotiations.
Although inflation is expected to reach 2.4% this year, above the central bank’s 2% target, Fed Chairman Jerome Powell considered this a temporary increase that will not change the Fed’s promise to maintain its benchmark interest rate overnight close to zero.
Long-term Treasury yields remained high and the yield curve sloped, as bond investors chose to focus more on raising inflation expectations.
The yen erased losses and yields on government bonds rose briefly after a media report that the Bank of Japan will agree to allow yields to be traded in a broader band when a two-day monetary policy meeting ends on Friday -market.
“If the Fed does not induce the tightening, it is very optimistic for risky assets,” said Teresa Kong, head of fixed income and portfolio manager at Matthews Asia. “We should be seeing a moderate recovery in Asian assets and currencies.”
Shares in South Korea and Singapore also jumped more than 1%, coming out of a strong session on Wall Street.
The S&P 500 closed at a record high on Wednesday and closed above 33,000 points for the first time, supported by the Fed’s strong economic forecast and Powell’s comments that it is too early to discuss gradual reduction measures.
The stock index for MSCI worldwide rose 0.35% to approach an all-time high.
The Fed projected that the US economy would grow 6.5% this year – the biggest annual production growth since 1984 – thanks in part to the huge federal fiscal stimulus and optimism about the success of coronavirus vaccines.
“It’s kind of shocking … that the United States government officially believes it will grow faster than the Chinese government believes it will grow this year,” said Christopher Smart, chief global strategist at the Barings Investment Institute in Boston, calling him the “head turning point for investors.” The yen erased losses and stabilized at 108.94 per dollar after the newspaper said the BOJ would allow 10-year bonds to rise 0.25% above or below zero, which is slightly wider than the current 0.2% band.
Yield on Japan’s 10-year reference government bonds rose briefly and futures fell, but the focus shifts to the outcome of the BOJ meeting on Friday.
The Australian dollar jumped to a two-week high of $ 0.7835 after data showed that the country’s economy created more than twice as many jobs as expected in February.
The benchmark 10-year US Treasury yields rose to 1.6639%, not far from the highest level since January last year.
The spread between two-year and ten-year U.S. earnings, the most monitored part of the yield curve, has risen to 155 basis points, which is the sharpest since September 2015.
The 10-year inflation equilibrium rate reached 2.309%, which shows that inflation expectations are at the highest level since January 2014.
Oil futures have increased their declines, hampered by rising inventories and expectations of weaker demand in Europe, where the launch of the coronavirus vaccine is faltering.
fell 0.63% to $ 67.57 a barrel, and US oil decreased 0.57% to $ 64.23.
rose 0.35% to $ 1,750.83 per ounce at 0119 GMT, while the US rose 1.1% to $ 1,745.80 per ounce, with the Fed’s promise to keep rates low and inflation concerns pushed the precious metal upwards.