SINGAPORE- Asian stocks jumped on Thursday while the dollar eased after Federal Reserve Chair Jerome Powell said a “disinflationary” process was underway, boosting risk appetite and hope that the US central bank will soon end its monetary tightening streak.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.84 percent higher, while Japan’s Nikkei rose 0.37 percent. Australia’s S&P/ASX 200 index added 0.37 percent.
Chinese stocks were 0.11 percent higher, while Hong Kong’s Hang Seng Index was up nearly 1 percent.
The US central bank announced an expected 25 basis points interest rate increase after a year of larger hikes and said it had turned a key corner in the fight against a high inflation rate. But policymakers projected “ongoing increases” in borrowing costs would still be needed.
Still, the market took a dovish cue from comments from Powell’s news conference. That helped the S&P 500 and the Nasdaq close sharply higher overnight.
Ali Hassan, portfolio manager & managing director at Thornburg Investment Management, said Powell was seemingly shrugging off easier financial conditions as a concern in his news conference.
“This was a greenlight that the market could buy without feeling that they are fighting the Fed.”
The focus will now switch to European Central Bank (ECB) and Bank of England (BOE) meetings scheduled for Thursday and the interest rate path the two central banks are likely to take.
Saxo Markets strategists said the ECB has surpassed its peers in the hawkishness quotient recently, and will likely repeat that this week.
The BOE will likely be the trickiest given indecisive market pricing as well as the scope for a split vote, they said.
