Beijing, Jan. 12 (BNA): Asian stock markets followed Wall Street higher on Wednesday after Federal Reserve Chairman Jerome Powell said monetary policy will return to normal and may raise interest rates earlier than planned.
Shanghai, Tokyo, Hong Kong and Sydney advanced. Oil prices rose.
Wall Street’s benchmark S&P 500 index rose 0.9% after Powell said policy “in all likelihood” will return to normal as bond purchases and other economic stimulus subside. Speaking before the Senate Banking Committee, he said ultra-low interest rates may be raised sooner than planned if needed to cool inflation that is at its highest levels in four decades, according to the AP.
“Wall Street now has a better understanding of how the Federal Reserve can normalize policy,” Oanda’s Edward Moya said in a report. “Following Powell’s testimony, some investors feel they got a pretty clear signal to buy the dip.”
The Shanghai Composite rose 0.2% to 3574.61 and Tokyo’s Nikkei 225 rose 1.9% to 28,748.21. Hong Kong’s Hang Seng rose 1.9% to 24,193.22.
The Kospi index in Seoul rose 1.4% to 2,969.16 and the S&P-ASX 200 in Sydney was up 0.6% at 7,438.20. New Zealand fell while Southeast Asian markets rose.
Investors were upset in mid-December when Federal Reserve officials said they would accelerate plans to end stimulus that boosts stock prices. They were trying to figure out how the world’s largest economic and financial markets would react.
On Tuesday, the S&P 500 broke a five-day streak of declines and rose to 4,713.07. The Dow Jones Industrial Average rose 0.5% to 36252.02. The Nasdaq Composite advanced 1.4% to 15153.45.
Apple shares rose 1.7 percent and chip maker Nvidia rose 1.5 percent. Telecom stocks and a mix of retailers and other companies that rely on direct consumer spending rose. Facebook’s parent Meta Platform gained 1.9% and the gap increased 3%.
The World Bank cut its forecast for global economic growth this year to 4.1% from 4.3% due in part to supply chain disruptions that have fueled inflation. The agency estimates that the global economy grew by 5.5% in 2021.
On Wednesday, the US government is set to report consumer price inflation. This is followed on Thursday by the wholesale price index.
HF