Investors are responding to the Fed’s decision

SINGAPORE – The Asia-Pacific markets broadly progressed Thursday as investors reacted after the US Federal Reserve’s policy committee voted to keep short-term interest rates close to zero in a widely expected move.

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

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

Shares in mainland China advanced: Shanghai’s composite was up 0.45%, while Shenzhen’s component was up about 0.68%.

Australian equities managed to weather the generally positive trend, with the benchmark ASX 200 down 0.43% as most sectors traded lower. But the energy and materials sub-indices rebounded from losses in the previous session to rise 0.37% and 0.24% respectively.

US stocks rallied overnight, as the Dow Jones Industrial Average first rose above 33,000, while government bond yields fell from past highs.

The Fed raised its expectations for economic growth, but indicated that there are unlikely to be any rate hikes until 2023.

Chairman Jerome Powell said he expects inflation to rise this year, due in part to soft year-over-year comparisons from the early days of the Covid-19 pandemic in 2020. However, he said this will not be enough to the policy that aims to change. inflation above 2% for a period of time if this 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 “dot graph” of individual members’ forecasts. For 2023, seven members see an increase from five in December.

Every quarter, the members of the FOMC forecast where short, medium and long-term interest rates will go. These projections are displayed visually in graphs and are called a dot plot.

“The FOMC statement was very similar to January’s,” strategists from the Commonwealth Bank of Australia wrote in a note Thursday morning. The Committee noted, however, that activity and employment indicators had increased recently. Nevertheless, the statement maintained that the ongoing health crisis continues to pose “significant risks to the economic outlook” and that the current level of policy adjustment remains appropriate. “

“The combination of unchanged median point plots and Chair Powell’s moderate comments pushed US and US bond yields down (after yields rose at the start of the day),” noted the CBA strategists.

In the forex market, the dollar tumbled against a basket of its peers as the dollar index fell from levels near 91,900 before the Fed decision to about 91,498 on Thursday during Asian trading hours.

The Japanese yen changed hands at 109.06 per dollar, weakening from an earlier level around 108.69, while the Australian dollar gained 0.42% to $ 0.7827.

Oil prices fell during Asian trading hours on Thursday. US crude oil futures fell 0.54% to $ 64.25 a barrel, while the global benchmark Brent fell 0.54% to $ 67.63.

Energy prices fell overnight due to growing concerns about fuel demand and rising US supplies. In Europe, there are concerns that the economic recovery could be delayed after several countries temporarily discontinued use of AstraZeneca’s Covid-19 vaccines over concerns about potential side effects.

CNBC’s Jeff Cox contributed to this report.