Asian Equities Rise after US Fed Announces a Pause on Rate Hikes

Asian shares mostly traded in green territory on Thursday after the US Federal Reserve left interest rates unchanged but projected two more quarter-point hikes before the end of the year.

The Nikkei 225 in Japan rose 0.19% as of 9:36 a.m. Bangkok time, ahead of the start of a two-day monetary policy meeting by the Bank of Japan.

With unemployment dropping to 3.6% in May on a seasonally adjusted basis, lower than the 3.7% predicted by economists surveyed by Reuters, the S&P/ASX 200 in Australia gained by 0.19%.

The Hang Seng in Hong Kong climbed 0.97%, while in Mainland China the Shanghai Composite added 0.14%.

South Korea’s Kospi, meanwhile, dropped 0.59%.

Late on Wednesday, the Federal Open Market Committee unanimously voted to keep the benchmark rate at a range of 5% to 5.25%, in line with market expectations. This is the first pause since the beginning of the cycle of hikes in early 2022, and it was carried out in order to “assess additional information and its implications for monetary policy.”

With policymakers apparently favoring a further half-point increase later this year, the terminal borrowing rate might reach an above-anticipated 5.6% by year’s end.

The FOMC statement suggests policymakers will resume monetary tightening by citing the “extent of additional policy firming that may be appropriate”; the previous statement in May left more room for debate as to whether to raise rates.

U.S. stock markets closed with a mixed performance following the Fed’s announcement, with the S&P 500 gaining 0.08% and the Nasdaq Composite gaining 0.39% from their respective closing prices. The Dow Jones Industrial Average, on the other hand, fell by 0.68%.