Asian stocks follow Wall St up as Powell says rates to rise

Asian stock markets followed Wall Street higher on Wednesday after Federal Reserve chairman Jerome Powell said monetary policy would return to normal and interest rates might be raised earlier than planned.

Shanghai, Tokyo, Hong Kong and Sydney advanced. Oil prices edged higher.

Wall Street's benchmark S&P 500 index rose 0.9 per cent after Powell said policy “in all likelihood” will return to normal as bond purchases and other economic stimulus winds down.

Speaking before the Senate Banking Committee, he said ultra-low rates might be raised earlier than planned if necessary to cool inflation that is at a four-decade high.

“Wall Street now has a better understanding on how the Fed will normalize policy,” Edward Moya of Oanda said in a report.

“After Powell's testimony, some investors feel they got the all-clear signal to buy the dip.” The Shanghai Composite Index gained 0.2 per cent to 3,574.61 and the Nikkei 225 in Tokyo rose 1.9 per cent to 28,748.21. The Hang Seng in Hong Kong gained 1.9 per cent to 24,193.22.

The Kospi in Seoul added 1.4 per cent to 2,969.16 and Sydney's S&P-ASX 200 was 0.6 per cent higher at 7,438.20. New Zealand retreated while Southeast Asian markets gained.

Investors were rattled in mid-December when Fed officials said they would accelerate plans to wind down stimulus that is boosting stock prices. They have been trying to figure out how the world's biggest economy and financial markets will react.

On Tuesday, the S&P 500 broke a five-day series of declines and rose to 4,713.07. The Dow Jones Industrial Average gained 0.5 per cent to 36,252.02. The Nasdaq composite advanced 1.4 per cent to 15,153.45.

Apple rose 1.7 per cent and chipmaker Nvidia rose 1.5 per cent. Communication stocks and a mix of retailers and other companies that rely on direct consumer spending rose. Facebook parent Meta Platforms gained 1.9 per cent and Gap rose 3 per cent.

The World Bank cut its forecast for global economic growth this year to 4.1 per cent from 4.3 per cent due in part to supply chain disruptions that fueled inflation. The agency estimates the world economy grew by 5.5 per cent in 2021.

On Wednesday, the US government is due to report consumer inflation. That is followed Thursday by an index of wholesale prices.

In energy markets, benchmark US crude rose 29 cents to USD 81.51 per barrel in electronic trading on the New York Mercantile Exchange.

The contract rose USD 2.99 on Tuesday to USD 81.22. Brent crude, used as the price basis for international oils, was 19 cents higher at USD 83.91 per barrel in London. It gained USD 2.85 the previous session to USD 83.72.

The dollar edged down to 115.33 yen from Tuesday's 115.37 yen. The euro rose to USD 1.1375 from USD 1.1366.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)