AP

Asian shares, oil prices mostly higher after Fed rate hike

Jul 27, 2022, 2:46 AM | Updated: 10:14 pm

BANGKOK (AP) — Shares were mostly higher in Asia on Thursday after the Federal Reserve ratcheted up its campaign against surging inflation by raising its key interest rate three-quarters of a point.

Hong Kong’s benchmark Hang Seng index slipped 0.6% to 20,554.09 after the territory’s Monetary Authority matched the Fed’s 0.75 percentage point rate hike with one of its own. The HKMA aligns its policies with U.S. monetary moves to keep the Hong Kong dollar at a stable rate with the U.S. dollar.

Elsewhere in the region, shares advanced, tracking gains on Wall Street after the Fed did exactly as expected and its chair, Jerome Powell, suggested the Fed’s rate hikes have already had some success in slowing the economy and possibly easing inflationary pressures.

Investors are awaiting an update on U.S. economic growth and a call between U.S. President Joe Biden and Chinese leader Xi Jinping.

“While a concrete decision on tariff relief is not expected from the meeting, any indications of willingness in working toward that is an added positive for markets,” Jun Rong Yeap of IG said in a commentary.

Tokyo’s Nikkei 225 edged 0.2% higher to 27,761.53 while the Shanghai Composite index added 0.6% to 3,294.42. In Seoul, the Kospi advanced 0.7% to 2,432.91.

Australia’s S&P/ASX 200 jumped 0.9% to 6,881.80 after the government reported that retail sales rose in June for the sixth consecutive month. Markets in Thailand were closed for a holiday.

On Wall Street investors welcomed the Fed’s widely expected move — which took its key interest rate to its highest level since 2018 — with a broad rally on Wednesday.

Powell’s comments were taken by some as a signal the Fed may not have to raise rates so aggressively in coming months, triggering a rally in the final hour of regular trading.

The S&P 500 climbed 2.6% to 4,023.61 and the tech-heavy Nasdaq surged 4.1%, its biggest gain in over two years, to 12,032.42. The Dow Jones Industrial Average rose 1.4% to 32,197.59. Smaller company stocks also gained, lifting the Russell 2000 2.4% higher, to 1,848.34. The indexes are now all on pace for a weekly gain, extending Wall Street’s strong July rally. The S&P 500 is up 6.3% so far this month.

Bond yields turned broadly lower following the Fed’s announcement. The two-year Treasury yield, which tends to move with expectations for the Fed, fell to 2.98% from 3.06% late Tuesday. The 10-year yield, which influences mortgage rates, fell to 2.78% from 2.79%.

Rate increases like Wednesday’s, the fourth so far this year, make borrowing more expensive and slow the economy. The hope is that the Fed and other central banks can deftly find the middle ground where the economy slows enough to whip inflation but not enough to cause a recession.

In a note Wednesday, analysts at Citi said that while Powell mentioned that a slowdown in hikes would be appropriate at some point, exactly when that might be remains unclear, adding that they “would not view this as a particularly dovish comment.”

“We continue to expect core inflation to push the Fed to hike more aggressively than they or markets anticipate,” the analysts wrote, noting they expect the Fed will announce another three-quarter point increase at its September policy meeting, with further rate hikes continuing into early 2023.

Meanwhile, some parts of the economy are already slowing, particularly the housing industry. Sales of previously occupied U.S. homes slowed in June for the fifth month in a row as mortgage rates have climbed sharply this year.

An update on the economy will come later Thursday with second quarter U.S. GDP data.

Shares in Microsoft and Google parent Alphabet rose 6.7% and 7.7%, respectively, after their latest quarterly reports.

Spotify Technology vaulted 12.2% after the music streaming service reported monthly active user and premium subscriber numbers that exceeded the Street’s expectations.

In other trading Thursday, U.S. benchmark crude oil added $1.04 to $98.30 per barrel in electronic trading on the New York Mercantile Exchange. It gained $2.28 to $97.26 on Wednesday.

Brent crude, the international standard for pricing, gained 93 cents to $102.60 per barrel.

The U.S. dollar cost 135.44 Japanese yen, down from 136.55 yen. The euro rose to $1.0208 from $1.0197.

___

AP Business Writer Alex Veiga contributed.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - Crystal Baziel holds the Pan-African flag Monday, June 19, 2023, during Reedy Chapel A.M.E C...

Associated Press

The beginner’s guide to celebrating Juneteenth

For more than one-and-a-half centuries, the Juneteenth holiday has been sacred to many Black communities. It marks the day in 1865 enslaved people in Galveston, Texas found out they had been freed — after the end of the Civil War, and two years after President Abraham Lincoln’s Emancipation Proclamation. Since it was designated a federal […]

1 day ago

A Boeing 737 Max suffered damage to parts of the plane's structure after it went into a “Dutch ro...

Associated Press

Plane that did ‘Dutch roll’ on flight from Phoenix suffered structural damage, investigators say

A Boeing 737 Max suffered damage to parts of the plane's structure after it went into a “Dutch roll” during a flight from Phoenix last month.

6 days ago

This photo provided by Randy Shannon shows Mooney Falls on the Havasupai reservation outside the vi...

Associated Press

Dozens report illness after trips to waterfalls near Grand Canyon

Dozens of hikers say they fell ill during trips to a popular Arizona tourist destination that features towering blue-green waterfalls deep in a gorge neighboring Grand Canyon National Park.

7 days ago

Mugshot of Rudy Giuliani, who was processed Monday, June 10, 2024, in the Arizona fake electors cas...

Associated Press

Rudy Giuliani posts $10K cash bond after being processed in Arizona fake electors case

Rudy Giuliani, a former New York City mayor and Donald Trump attorney, was processed Monday in the Arizona fake electors case.

9 days ago

FILE - White House former chief of staff Mark Meadows speaks with reporters at the White House, Wed...

Associated Press

Former Trump chief of staff Mark Meadows pleads not guilty in Arizona fake elector case

Former Donald Trump presidential chief of staff Mark Meadows and Trump 2020 Election Day operations director Michael Roman pleaded not guilty Friday in Phoenix to nine felony charges for their roles in an effort to overturn Trump's Arizona election loss to Joe Biden.

13 days ago

deadly heat wave last summer...

Associated Press

After a deadly heat wave last summer, metro Phoenix is changing tactics

Fresh memories of the deadly heat wave last summer have led Arizona authorities to launch new tactics ahead of summer 2024.

23 days ago

Sponsored Articles

...

Condor Airlines

Condor Airlines can get you smoothly from Phoenix to Frankfurt on new A330-900neo airplane

Adventure Awaits! And there's no better way to experience the vacation of your dreams than traveling with Condor Airlines.

...

DESERT INSTITUTE FOR SPINE CARE

Desert Institute for Spine Care is the place for weekend warriors to fix their back pain

Spring has sprung and nothing is better than March in Arizona. The temperatures are perfect and with the beautiful weather, Arizona has become a hotbed for hikers, runners, golfers, pickleball players and all types of weekend warriors.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

Asian shares, oil prices mostly higher after Fed rate hike