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Title: Asian shares firm as Fed tempers aggressive rate hike bets

May 05, 2022 02:55AM ET

By: AnalysisWatch

Asian stocks followed Wall Street's gains Thursday after the U.S. Federal Reserve raised interest rates by 50 basis points but struck a less aggressive tone than some feared, brightening investor sentiment and sending the dollar lower.

Crude oil prices, meanwhile, shot up after the European Union announced some details of its plan to ban the use of Russian oil, adding to supply concerns.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.93%, although trading was thin as Japanese and Korean markets were closed for the holidays.

China's stocks bucked the broader rally as rising COVID-19 cases and a tight lockdown of the Shanghai financial center weighed on sentiment.

Marcella Chow, global market strategist at Hong Kong-based J.P. Morgan Asset Management, said the Federal Reserve's 50 basis point rate hike was in line with expectations, easing some investor concerns about a more aggressive approach.

The gains in Asia followed a rally in the United States overnight, with the Dow Jones Industrial Average up 2.81%, the S&P 500 up 2.99%, and the Nasdaq up 3.19%.

Hong Kong's benchmark Hang Seng Index rose 0.77% in early trading, with the technology sector index up 1.43%.

For the week, Hong Kong stocks edged lower, while the Chinese yuan was choppy overseas, although still stronger than last week.

Australia's S&P/ASX 200 also performed strongly, rising 0.61%.

However, China's benchmark CSI300 index opened 0.16% lower as mainland markets resumed trading after a three-day holiday.

The Fed's half-percentage point increase in the benchmark interest rate was the biggest jump in 22 years.

Fed Chairman Jerome Powell said policymakers are prepared to decide on rate hikes of a similar magnitude at upcoming meetings in June and July.

Powell also said the Fed was not actively considering a 75-basis-point rate hike, which dampened some market expectations for an aggressive tightening path.

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