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TOKYO (AP) — Asian stocks generally rose Thursday after the U. S. Federal Reserve signaled it may no longer want to rein in Wall Street and the economy.
Japan’s benchmark Nikkei 225 index is up 0. 9% at 31,899. 00. Australia’s S-Index
Hong Kong’s Hang Seng gained 1. 2% to 17,296. 34, while the Shanghai Composite rose 0. 1% to 3,026. 32.
“It’s no surprise that Asian markets are definitely reacting to gains in U. S. stocks and bonds after the Federal Reserve reported that its policy tightening cycle might be nearing the end of the track. So it’s time to officially start designing this elusive and comfortable landing. ” said Stephen Innes, managing spouse of SPI Asset Management, in a comment.
In Japan, Prime Minister Fumio Kishida announced an economic stimulus package worth about $113 billion, aimed at cushioning the blow to household budgets due to emerging inflation and designed to counter the public weakening of his government. The package includes tax breaks for Americans and businesses, as well as subsidies to reduce emerging energy costs.
Stocks rose as Treasury yields fell in the bond market after the Federal Reserve announced its resolve to keep interest rates steady, as expected. The Federal Reserve has already cut the overnight rate from near 0 early last year to its point since 2001, above 5. 25%.
In turn, long-term Treasury yields have risen rapidly, with the yield on the 10-year Treasury note topping 5% last month to reach its point since 2007.
The 10-year yield stood at 4. 72% on Thursday morning, up from 4. 92% due on Tuesday.
Fed Chair Jerome Powell said the central bank is not sure its main interest rate is high enough to ensure peak inflation up to its 2% target. This has kept the option of additional rate hikes by the Fed. He also said the Fed has no plans to cut interest rates, which can act as steroids for money markets.
But Powell claimed that a recent rise in long-term Treasury yields and the drop in inventory costs they caused alone are slowing the economy and may simply deprive top inflation of its fuel. If they manage to do so persistently, he indicated that they could simply curb inflation without requiring additional rate increases.
Rising yields, for example, have already raised the steady average 30-year lending rate to about 8%, “and those higher prices will weigh on economic activity as this adjustment continues. “
The Federal Reserve has time to assess the full effects of its past hikes, he said.
“It takes time, we know that, and you can’t rush it,” Powell said.
Overall, Powell’s comments were “quite dovish” for money markets, according to Yung-Yu Ma, chief investment officer at BMO Wealth Management. “Thoughtful” is what Wall Street calls a tendency to keep interest rates low, and Ma expects the Federal Reserve to prevent rate hikes.
On Wall Street, the S
High yields are driving down the costs of stocks and other investments, while making borrowing more expensive for almost everyone. This slows down the economy and puts pressure on the entire monetary system.
U. S. employers announced more openings in late September than economists expected, according to a report released Wednesday. The Federal Reserve was hoping for an easing of this policy, which could ease inflationary pressure without requiring many layoffs.
Shares of big tech corporations gained on Wednesday, along with other high-growth stocks seen as the biggest beneficiaries of lower interest rates.
Chipmaker Advanced Micro Devices rose 9. 7% after reporting better-than-expected earnings and earnings for the latest quarter.
In trading on Thursday, benchmark U. S. crude gained 90 cents to $81. 34 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the foreign standard, gained 88 cents to $85. 51 a barrel.
The U. S. dollar edged slightly lower to 150. 35 Japanese yen from 150. 96 yen. The euro is worth $1. 0601, up from $1. 0570.
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AP Editor Stan Choe contributed.