Asian Stocks Higher After Fed Stimulus Pullback Accelerates | Business news

By ELAINE KURTENBACH, AP Business Writer

Shares rose in Asia on Thursday, tracking Wall Street gains after the Federal Reserve said it would accelerate the withdrawal of economic stimulus.

The Fed said it will likely raise interest rates three times next year to address rising inflation and contract its monthly bond purchases at twice the rate it previously announced, in line with its termination in March.

Tokyo’s Nikkei 225 index rose 1.8% to 28,979.60 and South Korea’s Kospi rose 0.2% to 2,996.04. The Shanghai Composite Index rose 0.3% to 3,657.85. India and Taiwan were up, while the S&P/ASX 200 in Sydney lost 0.4% to 7,296.10.

In Hong Kong, the Hang Seng fell 0.8% to 23,235.98.

Ongoing tensions between Beijing and Washington are casting a shadow, analysts say, after the US House of Representatives passed a resolution banning imports from China’s Xinjiang region over concerns over forced labor and other abuses.

Beyond that, the US is reportedly considering sanctions that would prevent companies from supplying equipment to China’s largest computer chip maker, SMIC.

Shares of the company traded in Hong Kong fell 3.4% on Thursday. They have fallen by almost 22% in the past six months.

“Some concerns about potentially tougher US sanctions have led investors to shun, with China’s SMIC recently re-introduced under US oversight, which appears to be limiting profits for China’s tech sector today,” IG’s Yeap Jun Rong said in a statement. commentary.

As the US accelerates its efforts to contain inflation, central banks in Europe are not expected to follow suit, analysts say.

“ECB pigeons will not budge,” Mizuho Bank said in a market report. “First, the economic recovery remains fragile, threatened by the ‘omicron’ variant,” it said.

Germany is in the midst of its worst wave of infections to date. In Asia, South Korea is struggling to curb rising caseloads.

Major US stock indices rose after falling before the release of the Fed’s statement at 2 p.m. Eastern Time. By the end of the day they were gaining momentum. The S&P 500 rose 1.6% to 4,709.85, making up for nearly all of its losses for the week and finishing just below the record it set last Friday.

The Dow Jones Industrial Average rose 1.1% to 35,927.43 and the tech-heavy Nasdaq composite gained 2.2% to 15,565.58. The Russell 2000 index of smaller company shares rose 1.6%. Bond yields rose higher.

The US central bank said its monthly bond purchases are no longer necessary as unemployment falls and inflation is at its 40-year high. The accelerated timetable puts the Fed on track to raise interest rates as early as the first half of next year.

Central bank policymakers were expected to announce a faster withdrawal at their last meeting of the year.

Companies have been struggling with supply chain problems and increased costs for months. It has been a major concern for investors as large companies pass those costs on to consumers, who have so far absorbed higher prices on everything from groceries to clothing and other consumer products.

Bond investors reacted more moderately to the Fed’s announcement. Bond yields rose higher, with the 10-year Treasury yield rising from 1.44% at the end of Tuesday to 1.46%.

Retailers and other businesses dependent on consumer spending recovered from an early decline. The sector slumped after the Commerce Department said sales rose a modest 0.3% in November but fell short of economists’ forecasts amid concerns that rising costs could weigh on consumer spending.

On another trading day on Thursday, US crude climbed 72 cents to $71.59 a barrel in electronic trading on the New York Mercantile Exchange. It gained 14 cents to $70.87 a barrel on Wednesday.

Brent oil, the international price base, rose 66 cents to $74.54 a barrel.

The US dollar rose from 114.04 yen to 114.16 Japanese yen. The euro fell to $1.1286 from $1.1292.

AP Business Writers Damian J. Troise, Alex Veiga and Stan Choe contributed.

Copyright 2021 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.