Asian stocks rise after Fed chair supports smaller rate hike

Beijing: Asian stock markets rebounded Thursday and oil prices climbed higher after the head of the Federal Reserve said he supports a smaller rise in interest rates than some expected.

Shanghai, Tokyo, Hong Kong and Sydney advanced even as Russian forces whose attack on Ukraine has roiled financial markets bombarded the country’s second-largest city and besieged two ports.

Wall Street’s benchmark S&P 500 index rose 1.9 per cent on Wednesday, recovering this week’s losses after Fed Chair Jerome Powell said the US central bank is set to raise its key interest rate for the first time since 2018. He said he supports a traditional rate hike of 0.25 percentage points instead of the bigger rise recommended by some policymakers.

Powell said the impact on the US economy of Russia’s attack is “highly uncertain.”

“Markets have reacted positively to the remarks, which is a debatable interpretation of Powell’s nuanced comments,” ING economists said in a report. “Volatility is the key here, and uncertainty. This isn’t going to go away any time soon.”

The Nikkei 225 in Tokyo rose 0.8 per cent to 26,608.21 and the Hang Seng in Hong Kong gained 0.6 per cent to 22,469.66. The Shanghai Composite Index advanced 0.1 per cent to 3,487.78.

The Kospi in Seoul added 1.6 per cent to 2,745.45 and Sydney’s S&P-ASX 200 was 0.8 per cent higher at 7,171.10. New Zealand and Southeast Asian markets also advanced.

Share prices have swung widely as investors try to figure out how the Russian attack will affect supplies of oil, wheat and other commodities and the global recovery from the coronavirus pandemic.

Traders already were uneasy about plans by the Fed and other central banks to fight inflation by withdrawing ultra-low interest rates that boosted stock markets.

The S&P 500 rose to 4,386.54. The Dow Jones Industrial Average gained 1.8 per cent to 33,891.35. The Nasdaq composite advanced 1.6 per cent to 13,752.02.

More than 90 per cent of stocks in the S&P 500 rose. Tech, finance and health care companies accounted for a big share of the rally. Energy stocks also helped lift the index as they rode higher oil prices.

Ford Motor Co. jumped 8.4 per cent after it said it was accelerating its transformation into an electric-vehicle company and separated its EV and internal combustion operations.

The yield on the 10-year Treasury bond, or the difference between its market price and the payout at maturity, rose to 1.89 per cent from Tuesday’s 1.72 per cent. However, yields still were below where they were before Russia’s invasion.

In energy markets, benchmark US crude rose another $2.68 to $113.28 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price basis for international oils, added $3.61 to $116.54 per barrel in London.

Both gains were smaller than Wednesday’s surge of more than $7 per barrel but still unusually wide margins for a daily change.

Leaders of OPEC and other major oil exporters decided Wednesday to stick to plans to gradually increase production. The coalition, made up of OPEC members led by Saudi Arabia and non-cartel members led by Russia, chose to increase production by 400,000 barrels per day in April.

Also this week, the United States and other major oil consumers in the International Energy Agency agreed to release 60 million barrels from strategic reserves to boost supplies. But that has had little impact on market prices.

In currency markets, Russia’s ruble gained 3.4 per cent against the US dollar but still was near a record low value of less than 1 cent. It has fallen nearly 25 per cent since the attack after Western governments imposed sanctions that cut off much of Russia’s access to the global financial system.

The dollar gained to 115.63 yen from Wednesday’s 115.58 yen. The euro declined to $1.1097 from $1.1126.

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