Markets in Asia-Pacific Rally as Traders Await Fed Powell’s Jackson Hole Speech

Shares in the Asia-Pacific markets opened in the green territory on Friday as investors awaited Federal Reserve Chair Jerome Powell’s speech on the central bank’s rate-hike plan, which was scheduled to take place later in the day at Jackson Hole.

As of 9:45 a.m. Thai time, Japan’s Nikkei 225 jumped 0.90%, and the Hang Seng index in Hong Kong gained 0.80% in early trade.

In Australia, the S&P/ASX 200 rose 0.87%. The Kospi in South Korea advanced 0.55% and mainland China’s Shanghai Composite was 0.55% higher.

“So it is a fair bet that the Powell speech will take a similar turn today,” said Robert Carnell, regional head of Research, Asia-Pacific, at ING.

“If so, the most likely market reaction would be a rise in yields at both the front and back of the yield curve, a sell-off in equities and dollar strength as markets seem to have been positioning themselves for a more supportive set of comments.”

As U.S. annual inflation remains at 8.5%, considerably above the Fed’s 2% target, investors have reduced their expectations that the Fed could lean toward a slower pace of rate hikes. However, Friday’s speech by Fed Chair Powell will be carefully reviewed for signs that a slowing economy could prompt the Fed to change its policy stance.

Futures contracts on interest rates currently point to a 60% chance of a 75 basis point raise from the Fed in September.

Major U.S. indices increased overnight. The Dow Jones Industrial Average gained 322.55 points, or 0.98%, to close at 33,291.78. The S&P 500 rose to 4,199.12, up 1.41%, and the Nasdaq Composite climbed to 12,639.27, up 1.67%.