Asian Shares Rise As Rate Hike Worries Ease

Asian stocks advanced on Thursday after the U.S. Federal Reserve announced a 75 basis point rate hike, as widely expected, and indicated that it may be appropriate to slow the pace of increases going forward. The Fed said policy will be set meeting-by-meeting amid signs of an economic slowdown.

The upside remained somewhat capped as trading in U.S. stock futures indicated that the U.S. rally could stall when Wall Street reopens later in the day.

Fed Chair Jerome Powell said he thought the U.S. isn’t currently in a recession, but economists say GDP may have contracted in the April to June period. A technical recession is defined as two consecutive quarters of GDP contraction.

Chinese shares rose ahead of U.S. President Joe Biden’s upcoming call with Chinese leader Xi Jinping. The benchmark Shanghai Composite Index edged up 0.2 percent to 3,282.58, while Hong Kong’s Hang Seng Index closed 0.2 percent lower at 20,622.68 as the city’s monetary authority raised the borrowing cost by 75 basis points for the second consecutive month.

Japanese shares eked out modest gains, but the upside was limited amid concerns over the domestic corporate outlook and the strengthening of the yen in the fallout from the Fed decision.

The Nikkei 225 Index closed 0.4 percent higher at 27,815.48, after having crossed the 28,000 mark for the first time since June 10. The broader Topix slipped 0.2 percent to 1,948.85.

Automaker Mitsubishi Motors jumped 10.9 percent after strong first-quarter results, while Nitto Denko declined 2.3 percent to extend losses for a fourth consecutive session.

Seoul stocks rose for a fourth straight session to hit a six-week high on less-hawkish-than-feared messaging from Fed Chair Jerome Powell.

The Kospi ended up 0.8 percent at 2,435.27, the highest close since June 17, while the Korean won saw its best day in two months.

Samsung Electronics gave up some early gains to end little changed after warning of weaker demand for phones and PCs.

Australian stocks posted strong gains amid hopes that consumer prices in the country might be starting to peak. Investors shrugged off data showing that retail sales increased at the slowest pace this year in June.

The benchmark S&P/ASX 200 Index jumped 1 percent to 6,889.70, marking its highest close since June 10. The broader All Ordinaries Index closed 1.1 percent higher at 7,115.90, with buying seen across the board. Investment bank Macquarie Group surged 3 percent after posting a higher first-quarter profit.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 Index rallied 1.7 percent to close at 11,328.19.

U.S. stocks surged overnight on the back of better-than-expected results from mega-cap tech companies and Fed Chair Jerome Powell’s comments that he doesn’t believe the U.S. is in a recession.

On the data front, reports on durable goods orders and pending home sales painted a mixed picture of the economy.

The Dow and the S&P 500 rose 1.4 percent and 2.6 percent, respectively to reach their best closing levels in well over a month, while the tech-heavy Nasdaq Composite soared 4.1 percent.

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