BEIJING: Asian stock prices surged for a second day Thursday after the Federal Reserve announced its first interest rate hike since 2008 and China promised support for its real estate and internet industries.
Hong Kong’s benchmark jumped 5.8% and Tokyo gained 3%. Shanghai, Seoul and Sydney advanced more than 1%. Oil prices gained more than $1 per barrel but stayed below $100.
Wall Street’s benchmark S&P 500 index rose 2.2% on Wednesday after the Fed raised its short term lending rate by 0.25 percentage points. The move was widely expected but investors were reassured it was smaller than the 0.5 percentage point hike advocated by some officials.
“First-rate hikes in a tightening cycle don’t normally signal the end of a bull market,” Shane Oliver of AMP said in a report. “But they are consistent with a more constrained and rougher ride. High inflation and the war in Ukraine also add to the risks.”
Asian markets also were buoyed by Wednesday’s promise by the Chinese government that it would “invigorate the economy” by supporting the struggling real estate industry, internet companies and entrepreneurs who want to raise capital abroad.
Chinese leaders appeared to be trying to rebuild private sector confidence after a drumbeat of anti-monopoly, data security and anti-debt crackdowns caused stock prices to plunge. The Hang Seng in Hong Kong rose to 21,246.76, adding to the previous day’s explosive 9.1% gain.
The Nikkei 225 in Tokyo surged to 26,508.77 and the Shanghai Composite Index advanced 2.6% to 3,252.96. The Kospi in Seoul was 1.8% higher at 2,706.65 and Sydney’s S&P-ASX 200 added 1.1% to 7,252.20. New Zealand and Southeast Asian markets also gained.
The Fed, in a move officials discussed well in advance, is trying to cool inflation that is at a four-decade high by gradually withdrawing ultra-low interest rates and another stimulus that boosted share prices. Other central banks also are preparing to withdraw stimulus they poured into the global economy after the coronavirus pandemic struck.
That is fueling anxiety among investors about economic growth, which also faces threats from Russia’s war on Ukraine, coronavirus outbreaks in China, soaring oil prices and uncertain global consumer demand. Forecasters expect as many as seven U.S. interest rate hikes this year.
Fed Chairman Jerome Powell said that before the Russian invasion of Ukraine he expected inflation to stabilize in the first quarter of this year. He said he now believes inflation will come down in the second half.
The S&P 500 rose to 4,357.86. The Dow Jones Industrial Average added 1.4% to 34,063.10. The Nasdaq composite gained 3.8% to 13,436.55 for its biggest daily gain in 16 months.
In energy markets, benchmark U.S. crude added $1.72 to $96.76 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.40 to $95.04 on Wednesday. Brent crude, the price basis for international oils, gained $1.78 to $99.80 per barrel in London. It declined $1.89 the previous session to $98.02.
Oil prices jumped in late February over concern President Vladimir Putin’s war on Ukraine might disrupt supplies from Russia, the second-biggest exporter. The dollar edged down to 118.66 yen from Wednesday’s 118.69 yen. The euro fell to $1.1033 from $1.0940.