Investors are reacting to the Fed’s decision

SINGAPORE – Asia-Pacific markets advanced on Thursday as investors reacted after the U.S. Federal Reserve’s policy-making committee voted to keep short-term debt rates close to zero at a widely expected measure.

The Nikkei 225 in Japan rose 1.58%, while the Topix index added 1.15%. Kospi, South Korea, rose 1.23% and the Kosdaq rose 0.87%.

In Hong Kong, the Hang Seng index rose 1.15%, while the Singapore Straits Times index gained 0.97%.

Shares in mainland China advanced: the Shanghai compound rose 0.45%, while the Shenzhen component rose 0.68%.

Australian equities outpaced the generally positive trend, with the benchmark ASX 200 falling 0.43% as most sectors traded lower. However, the energy and materials sub-indices recovered from the losses of the previous session and traded at 0.37% and 0.24%, respectively.

US stocks rose overnight and rose as the Dow Jones Industrial Average reached its first close above 33,000, while Treasury yields declined from previous highs.

The Fed raised its expectations for economic growth, but indicated that there are likely to be no interest rate hikes until 2023.

President Jerome Powell said he expects inflation to rise this year due, in part, to smooth year-on-year comparisons from the early days of the Covid-19 pandemic in 2020. However, he said there will not be enough. to change the policy that seeks inflation above 2% over a period of time, if it helps to achieve full and inclusive employment.

Four of the 18 members of the Federal Open Market Committee were looking for a rate hike in 2022, compared to just one at the December meeting, according to the “graphic point” of individual members ’forecasts. By 2023, seven members see a rise, compared to five in December.

Each quarter, FOMC members predict where interest rates will go in the short, medium and long term. These projections are represented visually in graphs and are called point graphs.

“The FOMC statement was very similar to the January statement,” Commonwealth Bank of Australia strategists wrote in a note on Thursday. “However, the Committee noted that indicators of activity and employment had increased recently. However, the statement maintains that the ongoing health crisis continues to pose” considerable risks to the economic outlook “and that current levels accommodation policies remain appropriate “

“The combination of unchanged midpoint plots and Chair Powell’s dovish comments pushed yields on US and US dollar bonds (following a rise in yields earlier in the day),” the strategists noted. of the ABC.

In the foreign exchange market, the dollar fell against a basket of its peers, as the dollar index fell from levels close to 91,900 before the Fed’s decision to 91,498 on Thursday during Asian trading hours.

The Japanese yen changed hands at $ 109.06, weakening from a previous level around 108.69, while the Australian dollar rose 0.42% to $ 0.78827.

Oil prices fell on Thursday during Asian trading hours. U.S. crude futures fell 0.54% to $ 64.25 a barrel, while world benchmark Brent fell 0.54% to $ 67.63.

Energy prices fell overnight due to growing concerns about fuel demand as well as rising U.S. inventory. In Europe, there is concern that the economic recovery may be delayed after several countries temporarily halted the use of AstraZeneca’s Covid-19 vaccines due to concerns about possible side effects.

– CNBC’s Jeff Cox contributed to this report.