TOKYO (AP) — Asian stocks experienced predominantly positive gains on Thursday following the decision by the U.S. Federal Reserve to maintain interest rates at their current levels.
In China, recent data revealed a decline in both consumer and factory activity during May, while cities witnessed a surge in unprecedented unemployment rates among young individuals. These developments occurred as the economic recovery, which ensued after the relaxation of pandemic restrictions, began to lose momentum. Concerned about potential job losses, consumers exhibited a slower return to retail stores and dining establishments than initially anticipated.
Japan witnessed a positive development in machinery orders for the month of April, marking the first growth in three months. However, trade figures for May revealed a continuous deficit for the past 22 months, attributed to the increasing costs of imports due to rising energy and other prices.
The Nikkei 225, Japan’s benchmark index, experienced a 0.3% rise, reaching 33,589.50. Meanwhile, Australia’s S&P/ASX 200 index saw a 0.3% increase, reaching 7,180.90. Conversely, South Korea’s Kospi index dipped by 0.4% to 2,607.60. In Hong Kong, the Hang Seng index gained 0.7% to reach 19,543.59, while the Shanghai Composite index in China edged up nearly 0.2% to 3,235.07.
Fed Chair Jerome Powell’s decision to maintain interest rates was accompanied by his statement that the economy should be given more time to adjust to previous rate hikes. Powell expressed the hope that by allowing for a gradual approach, they would avoid overshooting the target level.
While this decision might provide some relief for the economy and financial markets, there remains a degree of skepticism. Ruslan Lienkha, Chief of Markets at YouHodler, a financial services company, expressed reservations, stating that it is premature to conclude that Powell has successfully tackled the issue of inflation.
Amid expectations of future interest rate hikes, Wall Street closed with a mixed performance as investors reacted to the Federal Reserve’s decision to maintain rates unchanged in the interim.
The S&P 500 index concluded the day with a modest 0.1% increase, reaching 4,372.59, after experiencing fluctuations between gains and losses in response to the Fed’s announcement. On the other hand, the Dow Jones Industrial Average recorded a decline of 0.7%, closing at 33,979.33, while the Nasdaq composite saw a 0.4% rise, reaching 13,626.48. The market displayed uncertainty as investors grappled with the potential implications of future rate hikes, which could impact the financial landscape in the coming months.
In its most recent policy meeting, the Federal Reserve announced its decision to maintain interest rates at their current level. This choice was made in order to allow more time to assess the impact of the series of rate hikes implemented over the past 15 months on the economy. The Fed aims to strike a balance by using rate increases to moderate the economy, curbing high inflation while avoiding adverse effects on the job market that could potentially lead to a recession.
The majority of Fed policymakers indicated their expectation that the main interest rate would rise by at least 0.50 percentage points by the end of the year. Currently, the federal funds rate is already at its highest level since 2007, with a range between 5% and 5.25%.
Although inflation has moderated since reaching its peak last summer, Federal Reserve Chair Jerome Powell expressed concerns about the insufficient progress in underlying trends, suggesting a lack of comfort with the current situation.
Following the Fed’s announcement, bond yields in the market increased in anticipation of future rate hikes. The 10-year yield initially rose to 3.83% from 3.77% just before the announcement. However, it later declined to 3.79%, compared to the previous day’s rate of 3.82%. The 10-year yield plays a role in determining interest rates for significant loans, including mortgages.
Although inflation has moderated since reaching its peak last summer, Federal Reserve Chair Jerome Powell expressed concerns about the insufficient progress in underlying trends, suggesting a lack of comfort with the current situation.
Following the Fed’s announcement, bond yields in the market increased in anticipation of future rate hikes. The 10-year yield initially rose to 3.83% from 3.77% just before the announcement. However, it later declined to 3.79%, compared to the previous day’s rate of 3.82%. The 10-year yield plays a role in determining interest rates for significant loans, including mortgages.
In energy trading, the price of benchmark U.S. crude oil declined by 13 cents, settling at $68.14 per barrel on the New York Mercantile Exchange’s electronic trading platform. On the previous day, it experienced a drop of $1.15, closing at $68.27 per barrel.
Meanwhile, Brent crude, which serves as the international standard, experienced a decrease of 15 cents, reaching $73.05 per barrel.
Regarding currency trading, the U.S. dollar strengthened against the Japanese yen, with an exchange rate of 141.03 yen compared to 140.07 yen. Conversely, the euro weakened against the U.S. dollar, costing $1.0814 compared to $1.0833.
