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Asian, European markets rise as Fed eases fears of huge rate hike
AFP – Markets rallied Thursday after the US Federal Reserve played down chances of a huge interest rate hike in the near future, while oil extended gains as the European Union moved to ban imports from Russia.
US central bank officials announced an expected half-point lift in borrowing costs – the biggest since 2000 – as part of its battle to rein in inflation while unveiling a timetable to offload its vast bond holdings.
However, traders were given some much-needed cheer when Fed boss Jerome Powell said a 75 basis-point rise, which had been flagged by many observers, was not “not something the committee is actively considering”.
While he flagged more 50-point hikes to come, the news fuelled a rally on Wall Street, where all three main indexes piled on around three percent thanks to a surge in tech firms, which are most susceptible to higher rates.
“This was a reflection of relief, as investors came into the meeting fearful that the committee would be overly aggressive in tightening monetary policy,” said Clara Cheong of JP Morgan Asset Management.
“It remains to be seen
if the Fed can pull off this fine balancing act and orchestrate a soft landing, but for now we believe that the US economy is in a strong enough position to weather higher rates,” Cheong said.
“There is still, however, a risk that an overly aggressive approach can run the risk of tipping the economy into a recession in 2023.”
The gains in New York filtered through to Asia, where Hong Kong, Sydney, Taipei, Mumbai, Manila, Bangkok and Wellington rose. Singapore dipped. Shanghai advanced after returning from a break.
Source: https://www.khmertimeskh.com/501070242/asian-european-markets-rise-as-fed-eases-fears-of-huge-rate-hike/