Markets in Shanghai, Tokyo and Sydney rise after Fed meeting signals possibility of “even tighter stance”.
Asian stock markets gained on Thursday after the US Federal Reserve said higher interest rates may be needed to calm inflation.
Shanghai, Tokyo and Sydney advanced, and Hong Kong fell, as oil prices fell more than $1 a barrel to stay below $100.
Wall Street’s benchmark S&P 500 gained 0.4% on Wednesday after notes from the Fed’s latest meeting said “an even tighter stance may be appropriate” to bring inflation back to target. by 2%. They recognized that this could weaken the economy.
Investors fear that aggressive rate hikes in the United States and Europe to contain rising prices that are at their highest level in four decades could depress global economic activity.
“Stocks have risen because commodity and oil prices are collapsing,” said Stephen Innes of SPI Asset Management. “Both are the critical targets that Fed policy is designed to tame; therefore, inflation expectations are under control.
The Shanghai Composite Index rose 0.1% to 3,359.16 and the Nikkei 225 in Tokyo gained 0.8% to 26,304.12. The Hang Seng in Hong Kong fell 0.3% to 21,527.48.
The Kospi in Seoul climbed 1.8% to 2,333.74 and Sydney’s S&P-ASX 200 rose 0.3% to 6,613.30. New Zealand fell while Southeast Asian markets rose.
On Wall Street, the S&P 500 rose to 3,845.08. The Dow Jones Industrial Average gained 0.2% to 31,037.68. The Nasdaq composite added 0.3% to 11,361.85.
Last month, the Fed raised its key rate by three-quarters of a point to a range of 1.5% to 1.75%, the biggest increase in nearly three decades. Chairman Jerome Powell suggested at the time that a rate hike of half or three-quarters of a point, three times the Fed’s usual margin, was likely when policymakers meet later this month.
Notes released Wednesday following the June 14-15 Fed meeting confirmed that other officials had agreed that such an increase would be “probably appropriate.”
Inflation was boosted by Russia’s attack on Ukraine, which drove up the prices of oil and other raw materials, and Chinese anti-virus controls which shut down Shanghai and other industrial centers .
Oil prices closed below $100 a barrel on Tuesday for the first time since early May, but U.S. crude is still up more than 30% this year.
Benchmark U.S. crude fell $1.04 to $97.49 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 97 cents to $98.53 a barrel on Wednesday. Brent crude, the price basis for international trade, fell $1.19 to $99.50 a barrel in London. It fell from $2.08 the previous session to $100.69.
The dollar fell to 135.72 yen from 135.98 yen on Wednesday. The euro gained $1.0206 from $1.0182.