Asian stocks rise after Fed announces end of economic aid

People wearing face masks walk past the electronic board of a bank displaying the Hong Kong Stock Index in Hong Kong on Wednesday, November 3, 2021. Stocks were mostly down in Asia on Wednesday, weighed down by concerns about channels supply and shipping disrupted, despite the Dow Jones Industrial Average first closing above 36,000 points.  (AP Photo / Kin Cheung)

People wearing face masks walk past the electronic board of a bank displaying the Hong Kong Stock Index in Hong Kong on Wednesday, November 3, 2021. Stocks were mostly down in Asia on Wednesday, weighed down by concerns about channels supply and shipping disrupted, despite the Dow Jones Industrial Average first closing above 36,000 points. (AP Photo / Kin Cheung)

PA

Asian stocks rose on Thursday, boosted by the US Federal Reserve’s announcement to end the extraordinary aid to the economy it has been providing since the early days of the pandemic.

Japan’s benchmark Nikkei 225 gained nearly 1.0% early in the session to 29,809.67. South Korea’s Kospi added 1.0% to 3,005.11. The Australian S & P / ASX 200 edged up 0.2% to 7,405.20. The Hong Kong Hang Seng added 0.4% to 25,131.16, while the Shanghai Composite rose 0.3% to 3,509.13.

Analysts said the Fed’s signs remained accommodating, as well as hawkish, reassuring global markets that interest rates were not going to rise for some time.

“We had a ‘weak’ Fed move,” was how RaboResearch characterized the post.

But long-term concerns about Asian economies remain amid concerns that there could be a sixth wave of coronavirus infections, despite growing signs of a return to normal economic activity and freer movement. people traveling to certain countries. Eyes also remain on expected earnings reports from a range of companies in Asia, including Japanese automakers and tech companies.

On Wall Street, the S&P 500 rose 0.6% and the Dow Jones Industrial Average added 0.3%, both marking their fifth consecutive gain. The Nasdaq climbed 1%, extending its winning streak to an eighth day. All three indices set their last closing records.

In a statement released at 2 p.m. Eastern time, the Fed said it would start cutting its $ 120 billion in monthly bond purchases in the coming weeks by $ 15 billion per month. If this pace continues, the Fed could end its bond purchases as early as June. At this point, the Fed may decide to start raising its short-term policy rate, which affects many consumer and business loans.

The central bank reserved the right to change the rate at which it cuts bond purchases, which were meant to maintain long-term rates and stimulate borrowing and spending.

The Fed’s announcement was in line with what economists and markets were expecting as the central bank struggles to tackle inflation which now looks likely to persist longer than just a few months ago.

“Much of the bond reduction announcement was already built into the markets and shouldn’t have come as a surprise to anyone paying attention to what the Fed has been reporting for most of this year,” said Chris Zaccarelli, Managing Director investments for Independent. Alliance of advisers. “But the markets are already paying attention to how quickly the Fed will start raising interest rates and how quickly it will raise them.”

The S&P 500 gained 29.92 points to 4,660.57. The Dow Jones gained 104.95 points to 36,157.58. The Nasdaq added 161.98 points to 15,811.58. Smaller company stocks outperformed the market as a whole, a sign that investors were confident about economic growth. The Russell 2000 climbed 42.42 points, or 1.8%, to 2,404.28, its second consecutive all-time high.

Tech stocks and a mix of companies that rely directly on consumer spending accounted for a large chunk of the S&P 500’s gains. Adobe rose 2.3% and Tesla 3.6% to a record high.

Bond yields have broadly increased after the Fed’s statement. The yield on the 10-year Treasury bill rose to 1.59% from 1.54% on Tuesday night. It was trading at 1.57% shortly before the Fed issued its policy statement.

The Fed’s latest statement and policy change comes amid persistent inflation that has reduced corporate operations and raised commodity prices. It also makes finished products more expensive, raising concerns about whether consumers will cut back on spending as prices rise.

In a press conference on Wednesday, Fed Chairman Jerome Powell stressed that the outlook for inflation looks very uncertain, limiting the Fed’s ability to adjust policies accordingly. He suggested that inflation should slow next year as supply bottlenecks ease, but the Fed can’t be sure it will.

The central bank and investors have also been closely monitoring the recovery in the labor market, which has lagged behind the broader economic recovery. The Ministry of Labor will publish its employment report for October on Friday.

In energy trading, benchmark US crude slipped 95 cents to $ 79.91 a barrel. Brent crude, the international standard, fell 80 cents to $ 81.19 a barrel.

In currency trading, the US dollar rose from 113.98 yen to 114.16 Japanese yen. The euro cost $ 1.1607, compared to $ 1.1610.

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