TOKYO- Asian stocks followed Wall Street higher on Thursday after the US Federal Reserve said it would end bond-buying stimulus in March to set up three interest rate increases next year to tackle heated inflation.
Bond yields rose while the dollar stabilized after slumping overnight as havens fell out of favor. Gold gained along with crude oil.
“The economy no longer needs increasing amounts of policy support,” Fed Chair Jerome Powell said in a news conference after the conclusion of the two-day policy meeting.
Japan’s Nikkei climbed 1.67 percent and touched a three-week intraday high, while Taiwan’s benchmark gained 0.62 percent.
Mainland China shares slipped though, with an index of blue chips losing 0.12 percent.
MSCI’s broadest index of Asia-Pacific shares added 0.26 percent.
US e-mini futures pointed to a 0.12 percent rise for the S&P 500, after it rallied 1.63 percent overnight to finish near a record high.
The Federal Open Market Committee (FOMC) laid out a scenario in which the COVID-19 pandemic, despite the emergence of the Omicron variant, gives way to a benign set of economic conditions, with inflation easing largely on its own, interest rates increasing comparatively slowly, and the unemployment rate staying low in coming years.
“The FOMC delivered a hawkish tilt for Christmas (but) markets seemingly have taken the tilt in their stride given three hikes were close to being priced into the meeting,” Tapas Strickland, a director of economics at National Australia Bank, wrote in a note to clients.
“Powell didn’t think the Fed was behind the curve” in fighting inflation, Strickland added.
“Risk sentiment remains positive.”
Money markets see good odds for a first Fed hike by May, followed by more by September and December, although three quarter-point rate increases aren’t fully priced until February 2023. — Reuters
