Wall Street rose on Thursday, as Asian stocks followed Wall Street’s lead. The Federal Reserve chairman downplayed the possibility of larger rate hikes after the U.S. central banks largest increase in 20 years.
Australia, Shanghai, Hong Kong and other Southeast Asian markets advanced. Japan and South Korea markets were closed during holidays.
Wall Street’s benchmark S&P 500 index rose 3% Wednesday after the Fed raised its key rate by half a point or twice its usual margin. However, its chairman Jerome Powell stated that the U.S. central banking is not actively considering a larger increase.
Powell’s comments and the Fed’s rate increase “demonstrate” that Powell continues to attempt to orchestrate a soft landing while dealing with high levels of inflation, David Chao from Invesco stated in a report.
The Shanghai Composite Index grew 0.7% to 3,068.10, while Hong Kong’s Hang Seng climbed 0.4% to 20,949.22.
The S&P-ASX 200 in Sydney rose 0.6% to 7,349.60. New Zealand and Singapore both gained.
The Fed raised its key interest rate to a range between 0.75% and 1%, which is the highest level since the coronavirus pandemic two years ago.
Powell’s comments seemed to be intended to ease fears that the Fed, which was accused last year of responding too slowly to inflation spikes, may be heading for an unusually high rate hike of three quarters of a percent at its June meeting.
Investors are concerned about whether the Fed will be able to end inflation without causing a recession.
The Fed provided details on how it would reduce its Treasury debt and mortgage-backed security holdings. To pump money into the financial sector and lower long-term interest rates, the central bank has been purchasing bonds.
Powell stated that the U.S. can withstand rate increases without entering recession.
Powell stated that the economy was strong and well-positioned to manage tighter monetary policies. It’s not going be easy.
Wall Street’s S&P 500 climbed to 4,300.17. The Dow Jones Industrial Average rose 2.8% to 34.061.06. The Nasdaq composite rose 3.2% to 12,964.86.
About 85% of stocks in the S&P 500 rose. The gains were largely attributable to tech companies. Apple rose 4.1%
After Europe took a step closer towards imposing an embargo against Russian oil as a response to Moscow’s war in Ukraine, energy stocks were the largest gainers. An embargo on oil would cause prices to rise, which would give a boost to other suppliers. Exxon Mobil saw a 4% increase.
Thursday’s benchmark crude oil price rose 38 cents, to $108.19 per barrel in electronic trading on New York Mercantile Exchange. On Wednesday, the contract rose $5.40 to $107.81. Brent crude oil, which is the price basis of international oils, rose 52 cents to $110.66 a barrel in London. It rose $5.17 to $110.14 from the previous session.
From Wednesday’s 128.87yen, the dollar rose to 129.14yen. From $1.0613, the euro rose to $1.0623.
