Mon, February 06, 2023

Federal Reserve’s Decision and its Influence on Stocks

Stocks in Asia-Pacific

Stocks in Asia-Pacific rose on Thursday following the Federal Reserve’s decision on Wednesday to raise rates by half a percentage point. 

On Wednesday, the Federal Reserve increased its benchmark interest rate by half a percentage point, in line with market expectations. The Federal Reserve also outlined a program whereby it will eventually cut its bond holdings by $95 billion a month. 

Fed Chair Jerome Powell highlighted the commitment to bringing inflation down, though Powell said a 75 basis points hike is “not something the committee is actively considering”. 

U.S. stocks rose on Wednesday following the central bank’s decision. The S&P 500 gained nearly 3% to 4,300.17. The Dow Jones Industrial Average jumped 932.27 points or 2.81% to 34,061.06. The Nasdaq Composite advanced 3.19% to 12,964.86. 

Mainland Chinese stocks 

Mainland Chinese stocks strengthened their positions on Thursday. The Shanghai composite added 1.11% while the Shenzhen component recovered from earlier losses to rise 1.06%.

China’s services sector activity shrunk in April, a private sector survey showed on Thursday. The Caixin services Purchasing Managers’ Index fell to 36.2 in April, lower than March’s reading of 42.

As many people already know the 50-point mark in PMI readings separates growth from contraction. Besides, PMI readings are sequential and represent month-on-month expansion or contraction.

In Hong Kong, the Hang Seng index gained 0.66%. Shares of JD.com advanced 2.17% and Bilibili jumped 5.17%. Both companies were added by the U.S. Securities and Exchange Commission (SEC) to a list of companies facing delisting risk from American exchanges.

In India, the Nifty 50 gained 0.98% while the BSE Sensex added about 1%. Those moves came after the country’s central bank hiked its main lending rate at an off-cycle monetary policy meeting. The central bank on Wednesday raised the repo rate from 4% to 4.4%.

The S&P/ASX 200 in Australia added 0.63%. Markets in South Korea and Japan are closed on Thursday. 

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