Asian stocks rise after Fed sees inflation improving

BEIJING (AP) – Asian stock markets edged higher on Thursday after the Federal Reserve said the US economy is on track to lower inflation but further interest rate hikes are planned.

Shanghai, Tokyo, Hong Kong and Sydney moved forward. Oil prices have risen.

The Wall Street benchmark S&P 500 closed 1% higher after the Fed raised its key interest rate by 0.25 percentage points, less than previous hikes. Chairman Jerome Powell said that “the process of disinflation has begun” but that “permanent increases” in rates would be required.

Traders are hoping that central banks, which have repeatedly raised rates in the past year, will be forced to scale back plans to raise rates further as inflation falls. Some are expecting a U.S. cut until 2024, though Powell said he doesn’t expect a cut this year.

Markets took Powell’s comments as “dovish” despite his comment that it was too early to declare a win, Mizuho Bank’s Venkateshwaran Lavanya said in a report.

The gap between market pricing and the Fed’s plans “seems to have widened,” Lavagna writes. “That leaves room for a rough shock down the road.”

The Shanghai Composite index added 0.3% to 3284.50 points, while the Nikkei 225 in Tokyo added 0.1% to 27374.60 points. Hang Seng in Hong Kong rose 0.5% to 22,188.20 points.

Kospi in Seoul rose 0.7% to 2466.03, while the Sydney S&P-ASX 200 rose 0.2% to 7514.20.

The Indian Sensex opened down 0.3% to 59,544.52. New Zealand, Bangkok and Jakarta advanced while Singapore and Kuala Lumpur declined.

After Powell’s press conference on Wednesday, the S&P recovered from early losses and climbed to 4119.21, its highest close since August.

“Now we can say, I think for the first time, that the disinflationary process has begun,” Powell said. really big rise in unemployment.”

This appears to have encouraged investors who fear that central banks may want to push the global economy into recession in order to bring down inflation, which is close to multi-year highs.

The story goes on

The Dow Jones Industrial Average added less than 0.1% to 34,092.96. The Nasdaq composite index jumped 2% to 11,816.32.

Wednesday’s announcement raised the Fed’s overnight interest rate to a 16-year high from 4.5% to 4.75% from near zero at the start of last year.

Wednesday’s data gave a mixed picture of the US labor market, which is a factor in inflationary expectations.

Recruitment has remained robust despite repeated rate hikes. While this helps workers, it reinforces concerns that wage increases could increase upward pressure on prices.

According to ADP, the payroll handler, the number of private payrolls rose by 106,000 in January. This was a smaller increase than the previous month and below forecasts.

A separate US government report points to a greater force. It says job openings increased to 11 million in December, better than expected.

In energy markets, US benchmark oil rose 66 cents to $77.07 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.46 on Wednesday to $76.41. Brent crude, the benchmark for international oil trading, rose 59 cents to $83.43 a barrel in London. In the previous session, it lost $2.62 to $82.84 per barrel.

The dollar fell to 128.57 yen from 128.77 yen on Wednesday. The euro rose to $1.1018 from $1.0979.

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