Asian stocks rose broadly on Thursday after the U.S. Federal Reserve raised interest rates by 50 basis points, as widely expected, but struck a less hawkish tone than some had feared, saying inflation will “flatten out” over the coming months.
Fed Chair Jerome Powell’s less-hawkish comments sent the dollar and yields lower, while crude prices soared after the European Union unveiled new punitive actions against Russia, including a phased-in embargo on Russian oil imports.
Japanese and South Korean markets were closed for public holidays. China’s Shanghai Composite Index rose 0.7 percent to 3,067.76 as mainland markets resumed trading following a three-day holiday.
Investors ignored data showing that China’s services sector activity contracted at the second-steepest rate on record in April.
Hong Kong’s Hang Seng Index ended 0.4 percent lower at 20,793.40 amid concerns around China’s tech crackdown and the Covid lockdown in Shanghai.
In Australia, the benchmark S&P/ASX 200 Index climbed 0.8 percent to 7,364.70, with tech and commodity-related stocks leading the surge.
Qantas Airways fell as much as 2 percent before recouping much of its loss after the airline agreed to buy the rest of Australia’s Alliance Aviation Services Ltd. in a deal valuing the company at A$763 million.
New Zealand’s NZX-50 Index gained 0.6 percent to settle at 11,747.57.
U.S. stocks gained the most since May 2020 overnight and Treasury yields fell after the Fed indicated larger 75-basis-point increases weren’t in play for the next couple of meetings.
Powell expressed confidence the U.S. central bank could engineer a “soft landing” that tames inflation without sending the economy into a recession.
The Dow jumped 2.8 percent, the tech-heavy Nasdaq Composite surged 3.2 percent and the S&P 500 added 3 percent despite weak private sector job growth and service sector activity readings.
The Bank of England will hand down its policy decision later in the day amid bets the central bank will hike its main borrowing cost by a quarter point to one percent.
The U.S. Bureau of Labor Statistics is scheduled to release non-farm payroll (NFP) and unemployment rate data for April on Friday.
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