Asia report: Most markets rise after Fed policy announcement

Most markets in Asia finished above the waterline on Thursday, as investors welcomed the Federal Reserve’s hike in economic forecasts for the US economy overnight.

In Japan, the Nikkei 225 was up 1.01% at 30,216.75, as the yen weakened 0.18% against the dollar to last trade at JPY 109.04.

Technology giant SoftBank Group lost 1.73%, while among the benchmark’s other major components, robotics specialist Fanuc was up 1.94% and Uniqlo owner Fast Retailing rose 0.97%.

The broader Topix index advanced 1.23% by the end of trading in Tokyo to settle at 2,008.51.

On the mainland, the Shanghai Composite was 0.51% firmer at 3,463.07, and the smaller, technology-centric Shenzhen Composite gained 0.87% to 2,237.50.

South Korea’s Kospi grew 0.61% to 3,066.01, while the Hang Seng Index in Hong Kong rose 1.28% to 29,405.72.

The blue-chip technology stocks were higher in Seoul, with Samsung Electronics up 0.73% and SK Hynix rising 1.43%.

Sentiment was well and truly positive at the start of the Asian day, after the US Federal Reserve sated expectations by keeping short-term interest rates near zero in its latest policy decision.

Most members of the Federal Open Market Committee expected rates to remain near nil until at least the end of 2023, according to the remarks released after the two-day meeting.

The central bank did hike its forecasts for economic growth in America, however, to 6.5% for 2021, rising from the 4.2% growth it predicted in December.

That improvement in outlook was on the back of the rollout of Covid-19 vaccines, government stimulus money, and improving prospects for the US jobs market.

“The recovery has progressed more quickly than generally expected,” said Federal Reserve chair Jerome Powell.

“While we welcome these positive developments, no one should be complacent.”

Powell also said that weaker growth outside the United States was not a concern, quipping that when the American economy shows strength, that tended to support activity globally too.

Bond yields rose after Powell’s comments, with the US 10-year Treasury note last up 0.09 points at 1.734%, with Oxford Economics head of Asia Louis Kuijs noting that yields in Asia put in some significant gains as well, particularly in southeast Asia, India, Hong Kong and Australia.

“We expect international bond markets to calm down eventually, with further yield increases this year modest,” Kuijs said.

“But if US rates rise more substantially, yields in southeast Asia, India, Hong Kong, and Australia will likely feel more upward pressure than those in China and Japan, while Asia-Pacific exchange rates should depreciate further.”

As for stocks, Kuijs said most Asian markets could keep holding up relatively well.

“In some Asian emerging markets, stocks could come under downward pressure if ‘taper tantrum’ type pressures become more significant, even though better fundamentals should prevent drastic responses.”

Oil prices were lower as the region went to bed, with Brent crude last down 0.25% at $67.83 per barrel, and West Texas Intermediate slipping 0.39% to $64.35.

In Australia, the S&P/ASX 200 went against the regional trend, falling 0.73% to 6,745.90, with most subindices in the red.

The energy and materials sectors were the exceptions, clawing back their Wednesday losses to eke out gains of 0.04% and 0.01%, respectively.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 joined its counterpart benchmark in Sydney on the downside, losing 1% to 12,496.14.

Wellington’s bourse was led lower by energy generators, with Genesis Energy down 4%, Mercury NZ off 2.8% and Meridian Energy 4.7% weaker.

The down under dollars were in a mixed state against the greenback, with the Aussie last 0.18% stronger at AUD 1.2802, while the Kiwi weakened 0.16% to change hands at NZD 1.3835.