Asian markets rise after Fed says it will wind down bond purchases

TOKYO — Asian shares rose Thursday, boosted by the announcement from the U.S. Federal Reserve on winding down the extraordinary aid for the economy it been providing since the early days of the pandemic.

Japan’s benchmark Nikkei 225

gained 0.9% in early trading. South Korea’s Kospi

added 0.5%, and Australia’s S&P/ASX 200

edged up 0.2%. Hong Kong’s Hang Seng

added 0.2%, while the Shanghai Composite

rose 0.6%. Benchmark indexes in Taiwan

and Indonesia

advanced. Markets in Singapore and Malaysia were closed for holidays.

Analysts said the signs from the Fed continued to be dovish, as well as hawkish, reassuring global markets that interest rates weren’t going to be raised for some time.

“We got a ‘dowkish’ Fed move,” was the way RaboResearch characterized the message.

But long-term worries about Asian economies remain because of concerns there may be a sixth wave of coronavirus infections, despite growing signs of a return to normal economic activity and a freer flow of people traveling in some nations. Eyes also remain on earnings reports expected from an array of companies in Asia, including Japanese automakers and technology companies.

On Wall Street, the S&P 500

rose 0.6% and the Dow Jones Industrial Average

added 0.3%, both marking their fifth straight gain. The Nasdaq

climbed 1%, extending its winning streak to an eighth day. All three indexes set their latest record closing highs.

In a statement released at 2 p.m. Eastern, the Fed said it will begin reducing its $120 billion in monthly bond purchases in the coming weeks by $15 billion a month. If that pace is maintained, the Fed could be done winding down its bond purchases as early as June. At that point, the Fed could decide to begin raising its key short-term interest rate, which affects many consumer and business loans.

The central bank reserved the right to change the rate at which it reduces the bond purchases, which have been intended to hold down long-term rates and spur borrowing and spending.

The Fed’s announcement was in line with what economists and markets expected as the central bank moves to combat inflation that now looks likely to persist longer than it did just a few months ago.

Bond yields rose broadly after the Fed’s statement. The yield on the 10-year Treasury note rose to 1.59% from 1.54% late Tuesday. It was trading at 1.57% shortly before the Fed released its policy statement.

In energy trading, benchmark U.S. crude

slipped 95 cents to $79.91 a barrel. Brent crude
the international standard, lost 80 cents to $81.19 a barrel.

In currency trading, the U.S. dollar

rose to 114.16 Japanese yen from 113.98 yen.

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