Asian shares gain after Fed chair signals slower rate hikes

BANGKOK — Shares advanced in Europe and Asia on Thursday after a rally on Wall Street spurred by the Federal Reserve chair’s comments on easing the pace of interest rate hikes to tame inflation.

Signs that China may be shifting its approach to containing Covid-19 outbreaks to focus more on vaccinations, while some cities have lifted pandemic lockdowns, also helped lift sentiment.

In Europe, Germany’s DAX gained 0.5 per cent to 14,472.99 while the CAC 40 in Paris edged 0.1 per cent higher to 6,750.81. Britain’s FTSE 100 also was 0.1 per cent higher, at 7,580.56. The future for the S&P 500 was down 0.1 per cent while that for the Dow industrials fell 0.2 per cent.

Stocks on Wall Street roared higher on Wednesday after Fed Chair Jerome Powell, said in comments at the Brookings Institution that the central bank could begin moderating its pace of rate hikes as soon as December, when its policymaking committee will hold its next meeting.

“We have a risk management balance to strike,” Powell said. “And we think that slowing down (on rate hikes) at this point is a good way to balance the risks.”

The benchmark S&P 500 rose 3.1 per cent, snapping a three-day losing streak. The Dow Jones Industrial Average gained 2.2 per cent and the Nasdaq composite climbed 4.4 per cent. The Russell 2000 index rose 2.7 per cent.

“The optimism in the market is that perhaps the worse is over for the US in terms of inflation reading, and the Fed isn’t going to increase the interest aggressively,” Naeem Aslam of Avatrade said in a commentary.

In Asia on Thursday, Tokyo’s Nikkei 225 index added 0.9 per cent to 28,226.08 while the Hang Seng in Hong Kong advanced 0.8 per cent to 18,736.44. The Shanghai Composite index climbed 0.5 per cent to 3,165.47. In Seoul, the Kospi picked up 0.3 per cent to 2,479.84. Australia’s S&P/ASX 200 gained 1 per cent to 7,354.40.

Bangkok’s SET rose 0.8 per cent a day after the central bank raised its key interest rate by a quarter point to 1.25 per cent, aiming to curb inflation.

The stronger gains seen early in Asian trading had faded by the day’s end.

Markets have wobbled all year as the Fed has fought high inflation with aggressive interest rate increases.

“While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced — slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult,” Craig Erlam of Oanda said in a commentary.