Hong Kong, May 5 (BNA): Asian stocks tracked Wall Street gains on Thursday after the US central bank raised interest rates by 50 basis points but looked less hawkish than some had feared, boosting investor sentiment and sending the dollar lower.
MSCI’s broadest index of Asia Pacific shares outside Japan rose 0.93%, although trading was thin with Japanese and Korean markets closed for public holidays.
Chinese stocks defied the broader rally as a spike in COVID-19 cases and a strict lockdown in Shanghai’s financial hub weighed on sentiment.
Marcella Chow, global market analyst at Hong Kong-based JP Morgan Asset Management, said the Fed’s 50 basis point increase was in line with expectations, thus removing some investor concerns about a more aggressive move.
“Given that the Asian market has more certainty at the moment, I think this is likely to cause the market to go up a bit as well,” she said, according to Reuters.
Asian gains followed the rally in the US overnight with the Dow Jones Industrial Average up 2.81%, the S&P 500 up 2.99% and the Nasdaq advancing 3.19%.
Hong Kong’s benchmark Hang Seng Index is up 0.77% in early trade, with the Technology Sector Index adding 1.43%.
This week, Hong Kong stocks fell while the offshore Chinese yuan was volatile although still stronger than it was last week.
The Australian S&P/ASX 200 was also strong, up 0.61%.
However, China’s CSI300 index opened 0.16% lower as mainland markets resumed trading after a three-day holiday.
“There are still COVID-19 cases in Shanghai and different cities, so this will also continue to affect consumer and investor confidence,” said Zhao of JPMorgan Asset Management.
The Fed’s rate hike of half a percentage point was the biggest jump in 22 years. Federal Reserve Chairman Jerome Powell said policy makers are ready to agree to a rate hike of the same size at the upcoming policy meetings in June and July.
Powell also said the Fed was not “seriously considering” a 75 basis point rate hike, dampening some market expectations of a strong tightening path.
This sent the dollar lower, as it stayed in Asia early on.
The dollar index, which measures the greenback against six peers, was at 102.49, after being flat as 103.63 on Wednesday.
US Treasuries were not traded for the holiday in Japan, but yields also fell overnight. The benchmark 10-year yield was 2.9402% in the past, down from 3%.
US crude futures rose 0.4 percent to $108.21 a barrel, and Brent crude rose 0.36 percent to $110.54. Both benchmarks rose more than $5 a barrel on Wednesday.
HF