TOKYO: Japan and Hong Kong led gains in regional stocks on Thursday, joining a rally on Wall Street overnight as monetary tightening from the Federal Reserve eased the Ukraine war and potential risks of a recession in China.
Treasury yields fell slightly after the Fed raised the policy rate for the first time since 2018 — overnight reaching nearly three-year highs — with smaller yields to flatten the curve. The Fed raised rates as expected. Quarterly point and telegraph equivalent increases at each meeting for the remainder of this year to aggressively stamp inflation.
The safe-haven dollar, however, remained on the back foot and oil also stabilized well south of a recent multi-year high, ending the three-week-old offensive amid signs of material progress in talks between Russia and Ukraine. To what Moscow says is a “special military operation” to civilianize its neighbor.
Meanwhile, investor concerns about a sharp slowdown for China, which is battling a spreading Covid-19 outbreak with ultra-restrictive measures, prompted more incentives to support markets, Vice Premier Liu said on Wednesday. was assimilated after indicating.
Japan’s Nikkei climbed 3.0% and touched a two-week high in Thursday’s session, while South Korea’s Kospi rose 1.6% and Australia’s benchmark 1.4%.
Chinese blue chips rose 2.1% and Hong Kong’s Hang Seng was up 5.2%.
The MSCI index of regional stocks rose 2.5%.
US stock futures pointed to a 0.3% drop when they resumed, but were followed by a 2.2% increase for the S&P 500 overnight.
National Australia Bank economist Taylor Nugent wrote in a client note that stocks remained strong despite the Fed’s more aggressive lean as Chair Jerome Powell “emphasized that the economy was strong enough to withstand growth,” adding That he was not worried about the prospect of a recession.” ,
Nugent said that “glimps of progress” in the Russia-Ukraine peace talks had already lifted market sentiment, along with comments from Chinese officials that the current COVID response should be bolstered by efforts to support economic growth and capital markets. will be coordinated with
Australian and Japanese government bond yields rose on Thursday, tracking a jump in US Treasury yields overnight.
The two-year Treasury yield hit 2.002% after the Fed’s decision before lowering it to 1.9235% in Tokyo trading, while the 10-year yield jumped to 2.2460% and then lowered as low as 2.1545% on Thursday. Both the levels were at their highest level since May 2019.
Although the safe-haven greenback fell out of favor amid improving market sentiment, and while the Fed’s meeting results were bleak, analysts saw it as within the range of market expectations.
The dollar index, which tracks the currency against six major peers, remained weak, slipping an additional 0.12% to 98.360 after falling 0.47% on Wednesday.
Crude oil rose on Thursday, the International Energy Agency (IEA) said, adding that a fall in crude oil prices will not cut off supplies of Russian oil, but not enough to offset the previous day’s fall.
Brent crude futures rose about 66 cents, or 0.67%, to $98.68 a barrel, after hitting a recent peak of $129.30. US West Texas Intermediate (WTI) crude rose 84 cents, or 0.86%, to $95.86 a barrel, from $124.58 a barrel earlier this month.