Asian Shares Rise Tracking Gains on Wall Street Overnight after Dovish Comments from Fed Officer

Asia and Pacific shares rose on Friday, tracking Wall Street’s advances overnight on dovish remarks from a Federal Reserve policymaker in favor of maintaining quarter-point rate raises.

As of 9.41 A.M. (Thai time), the Shanghai Composite in China climbed 0.17%. Hong Kong’s Hang Seng index rose 0.50%.

The Caixin/S&P Global services purchasing manager’s index rose to 55 in February from 52.9 in January, indicating increased activity in China’s services sector.

The unemployment rate in Japan fell to 2.4% in January, the lowest level since February 2020, sending the Nikkei 225 index higher by 1.42%.

In Australia, the S&P/ASX 200 rose 0.37%, while the South Korean Kospi traded marginally lower.

Stocks in the United States opened the trading day under pressure but later rebounded following Atlanta Fed president Raphael Bostic’s comments. Major U.S. indices all ended the day higher, with the Dow Jones Industrial Average leading the way with a gain of 1.05% while the S&P 500 and Nasdaq Composite respectively climbed 0.76 and 0.73 points.

According to Bloomberg analysts, investors are increasingly weigh the potential for further increases in interest rates in the United States and Europe. Current swaps market pricing indicates that the Federal Reserve policy rate will peak at 5.5% in September, with some investors betting that it will rise even higher, to 6%.

“We think the Fed will roughly end between 5.25% and 5.75%. I think that’s restrictive enough,” Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg Television. “But I think that there is a cohort of investors who think the Fed may have to hike a lot more and that’s why interest rates are rising as much as they have recently.”

TD Securities forecasts that risk assets would underperform when the Fed achieves its goal of slowing the economy through rate hikes, making long Treasuries a favorable longer-term bet.

Investors are also keeping an eye on China’s National People’s Congress, which begins on Sunday and might be a boost for risk sentiment.