Asian Equities Advance as Investors Digest Fed’s Smaller Quarter-Point Hike

Thursday saw gains across key indexes in Asia as traders digested the U.S. Federal Reserve’s decision to raise interest rates by a more modest 25 basis points and Chairman Jerome Powell’s subsequent acknowledgment that inflation is declining.

At 9:24 AM (Thai time), the Hang Seng had gained 0.69 points, while the Shanghai Composite added 0.20 points.

The government statistics indicated that South Korea’s consumer price index increased by 5.2% in January on an annualized basis, the first time in three months, causing the Kospi to rise by 0.40%.

A 0.27-point increase was seen on Japan’s Nikkei 225. The S&P/ASX 200 index in Australia climbed 0.33%.

Traders on Wall Street brushed off the Fed’s scant hints that it might be winding down its hiking cycle. The Dow Jones Industrial Average increased by 0.02%, while the S&P 500 gained 1.05% and the Nasdaq Composite rose 2%.

In line with market forecasts, the Federal Reserve lifted its benchmark overnight lending rate by 25 basis points, or 0.25 percentage point. Given this increase, the Fed’s target range is now between 4.5 and 4.75%, the highest it has been since 2007.

However, the Fed maintained language in its statement stating that the FOMC still sees the need for “ongoing increases in the target range.” The statement was accepted unanimously and did not include any changes to the language that market participants had hoped for.