Asian shares gain after Fed chair signals slower rate hikes

Nov 29, 2022, 8:55 AM | Updated: Nov 30, 2022, 8:59 pm
FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wed...

FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)

(AP Photo/John Minchillo, File)

              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              A man walks by monitors showing the Japanese yen against other foreign currencies at a securities firm in Tokyo, Thursday, Dec. 1, 2022. Shares have advanced in Asia after a rally on Wall Street spurred by the Federal Reserve chair's comments on easing the pace of interest rate hikes to tame inflation.(AP Photo/Hiro Komae)
            
              Tokyo fire department personnel wait for a traffic light, standing by monitors showing Japan's Nikkei 225 index at a securities firm in Tokyo, Thursday, Dec. 1, 2022. Shares have advanced in Asia after a rally on Wall Street spurred by the Federal Reserve chair's comments on easing the pace of interest rate hikes to tame inflation.((AP Photo/Hiro Komae)
            
              A woman walks across an intersection near monitors showing Japan's Nikkei 225 index at a securities firm in Tokyo, Thursday, Dec. 1, 2022. Shares have advanced in Asia after a rally on Wall Street spurred by the Federal Reserve chair's comments on easing the pace of interest rate hikes to tame inflation.((AP Photo/Hiro Komae)
            
              A man walks by monitors showing the Japanese yen against the U.S. dollar at a securities firm in Tokyo, Thursday, Dec. 1, 2022. Shares have advanced in Asia after a rally on Wall Street spurred by the Federal Reserve chair's comments on easing the pace of interest rate hikes to tame inflation.( (AP Photo/Hiro Komae)
            
              A woman uses her phone in front of monitors showing Japan's Nikkei 225 index at a securities firm while waiting for a traffic light in Tokyo, Thursday, Dec. 1, 2022. Shares have advanced in Asia after a rally on Wall Street spurred by the Federal Reserve chair's comments on easing the pace of interest rate hikes to tame inflation.(AP Photo/Hiro Komae)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Street signs at the intersection of Wall and Broad Streets are shown in lower Manhattan, Wednesday, Oct. 13, 2021. (AP Photo/John Minchillo, File)
            
              FILE - Flags adorn the facade of the New York Stock Exchange, Wednesday, June 16, 2021.   (AP Photo/Richard Drew, File)
            
              Currency traders watch monitors near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, Nov. 30, 2022. Asian shares were mostly lower Wednesday ahead of a closely watched speech by the Federal Reserve chief that may give clues about future interest rate hikes. (AP Photo/Ahn Young-joon)
            
              A currency trader passes by the screens showing the foreign exchange rates at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, Nov. 30, 2022. Asian shares were mostly lower Wednesday ahead of a closely watched speech by the Federal Reserve chief that may give clues about future interest rate hikes. (AP Photo/Ahn Young-joon)
            
              Currency traders watch monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, Nov. 30, 2022. Asian shares were mostly lower Wednesday ahead of a closely watched speech by the Federal Reserve chief that may give clues about future interest rate hikes. (AP Photo/Ahn Young-joon)

BANGKOK (AP) — Shares advanced in Asia on Thursday after a rally on Wall Street spurred by the Federal Reserve chair’s comments on easing the pace of interest rate hikes to tame inflation.

Signs that China may be shifting its approach to containing COVID-19 outbreaks to focus more on vaccinations also helped drive buying of shares across the region.

Tokyo’s Nikkei 225 index added 1.1% to 28,281.04 while the Hang Seng in Hong Kong advanced 1.6% to 18,895.51. The Shanghai Composite index climbed 0.7% to 3,171.85. In Seoul, the Kospi edged 0.2% higher to 2,478.01. Australia’s S&P/ASX 200 gained 0.8% to 7,340.10.

Bangkok’s SET rose 0.4% a day after the central bank raised its key interest rate by a quarter point to 1.25%, aiming to curb inflation.

On Wednesday, Fed Chair Jerome Powell, said in comments at the Brookings Institution that the central bank could begin moderating its pace of rate hikes as soon as December, when its policymaking committee will hold its next meeting.

“We have a risk management balance to strike,” Powell said. “And we think that slowing down (on rate hikes) at this point is a good way to balance the risks.”

Stocks roared higher following Powell’s midafternoon remarks. The benchmark S&P 500 rose 3.1%, snapping a three-day losing streak and closing at 4,080.11. The Dow Jones Industrial Average gained 2.2% to 34,589.77 and the Nasdaq composite climbed 4.4% to 11,468.

Small company stocks also rallied. The Russell 2000 index rose 2.7% to 1,886.58.

More than 95% of the stocks in the S&P 500 advanced, with technology companies leading the gains. Apple rose 4.9% and Microsoft jumped 6.2%.

The major indexes ended November with their second straight month of gains, though they remain in the red for the year.

Powell’s comments sent Treasury yields sharply lower. The yield on the 10-year Treasury dropped to 3.65% from 3.75% late Tuesday. The yield on the two-year note, which tends to track market expectations of future Fed action, fell to 4.34%. It was trading at 4.48% late Tuesday and had been as high as 4.53% shortly before Powell’s speech.

While citing some recent signs that inflation is cooling, Powell stressed that the Fed will push rates higher than previously expected and keep them there for an extended period to ensure inflation comes down sufficiently.

“History cautions strongly against prematurely loosening policy,” Powell said. “We will stay the course until the job is done.”

Major indexes have been unsteady all year as the economy and financial markets dealt with stubbornly hot inflation and the Fed’s attempt to cool high prices with aggressive interest rate increases.

Wall Street has been hoping that the Fed will slow the scale and pace of its interest rate hikes. It has raised its benchmark interest rate six times since March, driving it to a range of 3.75% to 4%, the highest in 15 years. The goal is to make borrowing more costly and generally slow the economy in order to tame inflation.

Higher mortgage rates have caused home sales to plunge and higher interest rates also have raised costs for most other consumer and business loans.

The economy has been slowing, and many economists expect the U.S. to slip into a recession next year. But there are strong pockets of growth. The government said Wednesday that the economy expanded at a 2.9% annual rate from July through September, an upgrade from its initial estimate.

Consumers have continued spending, despite inflation squeezing wallets. Overall, employment remains strong, though job openings dropped in October more than economists had anticipated and human resources company ADP reported an easing in private sector hiring in November.

Investors will get more data Thursday on the employment sector with a report on weekly unemployment claims. The closely watched monthly report on the job market will be released on Friday.

In other trading Thursday, U.S. benchmark crude oil lost 22 cents to $80.33 a barrel in electronic trading on the New York Mercantile Exchange. It climbed 3% on Wednesday.

Brent crude, the pricing basis for international trading, shed 30 cents to $86.67 a barrel.

The U.S. dollar fell to 136.79 Japanese yen from 138.09 yen. The euro rose to $1.0431 from $1.0409.

___

AP Business Writers Damian J. Troise and Alex Veiga contributed.

___

Yuri Kageyama and Matt Ott contributed to this report.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Asian shares gain after Fed chair signals slower rate hikes