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Asia Pacific stocks mostly up as U.S. stocks and bonds surge

Asia Pacific stocks

China’s Shanghai Composite was up 0.53%, Shenzhen Component fell 0.79%, ASX 200 rose 0.63% and Hang Seng Index rose 1.22%

Asia Pacific stocks were mostly up on Thursday morning, with surging U.S. stocks and bonds providing a boost. Investors breathed a sigh of relief after the U.S. Federal Reserve’s latest policy decision was as expected and averted concerns of larger-than-expected hikes.

China’s Shanghai Composite was up 0.53% by 2 AM GMT while the Shenzhen Component fell 0.79%. Chinese markets re-opened after a holiday, and the Caixin services purchasing managers index was 36.2 in April 2022.

In Australia, the ASX 200 rose 0.63%, with data released earlier in the day showing that building approvals contracted 18.5% month-on-month in March 2022. The data also showed that imports contracted 5% month-on-month, and the trade balance stood at A$9.314 billion (US$6.66 billion).

Hong Kong’s Hang Seng Index rose 1.22%.

Japanese and South Korean markets are closed for a holiday.

Australian debt rallied after a drop in the two-year U.S. Treasury yield, while there is no cash Treasuries trading in Asia due to the holiday in Japan.

The Federal Open Market Committee hiked its interest rate to 1%, the largest increase since 2000, as it handed down its policy decision on Wednesday. Fed Chairman Jerome Powell said the 75-basis points super-hike feared by investors is ‘not something that the committee is actively considering,’ adding that policymakers view the “neutral” level of the fed funds rate to be 2% to 3%.

The market had pretty much fully priced in today’s actions, Doubleline Group LP fund manager Ken Shinoda told Bloomberg.

Shinoda said: In fact, I think today’s actions were a little bit less hawkish than maybe some had expected.

The Fed also said it would allow its holdings of Treasuries and mortgage-backed securities to decline in June at an initial combined monthly pace of $47.5 billion, stepping up over three months to $95 billion.

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