Asian Shares Gain As Wall Street Somewhat Recovers

Asian stocks rose on Thursday, June 16, 2022, after the Federal Reserve raised its key interest rate by three-quarters of a point and signaled more rate hikes were on the way to combat inflation, according to Yuri Kageyama of the Associated Press (AP).

Photo Insert: Some of the Wall Street gains were the first in six days.

Wall Street rose on Wednesday following the Fed's hike, the largest since 1994, as investors took heart from Chair Jerome Powell's comments suggesting future rate hikes may be more gradual.

The larger-than-usual rate increase had been predicted for weeks. Starting Thursday, the Bank of Japan will hold a two-day policy meeting. Given the yen's weakness as a result of US rate hikes and Japan's ultra-low interest rates, the Japanese central bank is under pressure to act.

In anticipation of higher yields from dollar-denominated holdings, investors have been selling yen and buying dollars. Japanese politicians and the head of the central bank have expressed concern about the yen's decline, but no drastic policy changes are expected.

The US dollar rose to 134.56 Japanese yen early Thursday, up from 133.82 yen. It recently reached a high of 135 yen, the highest level in 20 years. The euro is now worth $1.0438, down from $1.0447. The Nikkei 225 index of Japan rose 1.8 percent in morning trading to 26,793.19. The S&P/ASX 200 index in Australia rose 0.4 percent to 6,627.50.

The Kospi in South Korea rose 1.2 percent to 2,476.61. The Hang Seng in Hong Kong fell 0.6 percent to 21,178.90, while the Shanghai Composite lost earlier gains to fall 0.1 percent to 3,301.89.

On Wall Street, the S&P 500 rose 1.5 percent to 3,789.99 after a roller-coaster trading session immediately following the Fed's latest move. Treasury yields fell in the bond market after Powell hinted at smaller rate hikes later this year.

Earlier this week, yields rose to their highest level in more than a decade on expectations of a more aggressive Fed. The two-year Treasury yield fell to 3.21 percent from 3.45 percent late Tuesday, with the biggest drop occurring after Powell stated that 0.75 percentage point rate hikes would be rare. The 10-year Treasury yield fell to 3.34 percent from 3.48 percent.

The Dow Jones Industrial Average fluctuated between gains and losses before finishing 1% higher at 30,668.53. The Nasdaq composite increased by 2.5 percent to 11,099.15. The S&P 500 entered a bear market earlier this week, and the gain on Wednesday was its first in six days.

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