Fed raises rate, oil prices and currencies

Fed raises rate, oil prices and currencies

SINGAPORE — Asia-Pacific markets rallied on Thursday, tracking US stocks after the Federal Reserve raised benchmark interest rates 75 basis points in a move that equates to the most aggressive hike since 1994.

Japan’s Nikkei 225’s rose nearly 2% after markets opened and it was a sea of ​​green among the automakers and tech stocks. Sony was up nearly 2.4%, Softbank Group rose by about 1.45% while Toyota jumped by nearly 4%.

In Australia, the S&P/ASX 200 was trading higher by about 0.6%. Rio Tinto, Fortescue Group and BHP were all pushing higher by nearly 2%.

Over in South Korea, the Kospi index also went up by 1.61%.

Following the rate hike in the US, Wall Street was volatile but market indexes rose to session highs after the Federal Open Market Committee took the level of its benchmark funds rate to a range of 1.5%-1.75% — the highest since just before the Covid pandemic began in March 2020.

Fed Chairman Jerome Powell also said during his afternoon press conference that, “either a 50 basis point or a 75 basis point increase seems most likely at our next meeting.”

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The Dow Jones Industrial Average snapped a five-day losing streak, jumping 303.70 points, or 1%, to close at 30,668.53. The S&P 500 rose 1.46% to 3,789.99 while, the Nasdaq Composite gained 2.5% to end the day at 11,099.15.

The Fed said in a statement it was committed to bringing down inflation — currently at a high of 8.6 per cent — to 2%. It also said it would continue to reduce holdings of Treasury securities and agency debt and agency mortgage-backed securities.

Economic data for Asia Pacific today includes Australian unemployment figures and Japan’s trade data.

Currencies

The US dollar index, which tracks the greenback against a basket of its peers, was at 105.158 — turning downwards after hitting a high on Tuesday at 105.298.

The Japanese yen traded at 134.07 per dollar, strengtheningly markedly from earlier trading this week. The Australian dollar was at $0.7002, also jumping against the US dollar after weakening to 0.68 earlier this week.

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