The immediate priority is to get inflation under control.
Markets in mainland China rose. The Shanghai Composite was up 0.23% to 3,283.14, while the Shenzhen Component was up 0.23% to 12,428.72.
Japan’s Nikkei 225 rose 0.36% to 27,815.48, while the Topix index rose 0.16% to 1,948.85.
MSCI’s broadest index of Asia Pacific stocks outside of Japan rose 0.8%.
Fed hike
The rate hike takes the Fed’s interest rate to its highest level since December 2018.
Fed Chair Jerome Powell’s forecast of what the central bank would do next buoyed US stocks overnight.
“As monetary policy tightens further, it will likely become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments affect the economy and inflation,” he said.
Less than two months before the next Fed meeting, at which there will be two jobs reports and two inflation reports, ING analysts pointed out in a note.
“A lot could happen in that time, so it’s not surprising that the Fed is a bit vague in its forward guidance,” the analysts wrote.
“The immediate priority is getting inflation under control, but we believe the Fed will move to a 50 basis point hike at the September and November FOMC meetings and a final 25 basis point hike in December” , they added.
Persistently high inflation has undoubtedly caused global central banks to change course. And that has increased recession risks.
Markus Pebble
CIO, Global Credit, Pimco
According to CME Group’s FedWatch tool, expectations for a 50 basis point gain in September in Asia were at 66% as of Thursday morning. The Fed said it was determined to bring inflation down.
Powell also said he doesn’t think the US is currently in a recession.
But Mark Kiesel, chief investment officer of global credit at Pimco, said recession risks have increased.
“There is no doubt that persistently high inflation has caused global central banks to change course. And that has increased recession risks,” he told CNBC’s Street Signs Asia on Thursday.
The Dow Jones Industrial Average rose 436.05 points, or about 1.4%, to 32,197.59. The S&P 500 rose 2.62% to 4,023.61 and the Nasdaq Composite rose 4.06% to 12,032.42 a day after quarterly results from Alphabet and Microsoft.
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In Asia, the Australian Bureau of Statistics released data showing retail sales rose 0.2% in June. Economists polled by Portal predicted the report would show growth of 0.5%, compared with 0.9% in May.
The Thai market is closed for a public holiday on Thursday.
Samsung’s second-quarter earnings improved slightly from a “better-than-expected” earnings forecast earlier this month that prompted a rally in chip stocks.
Operating profit rose to KRW 14.1 trillion (US$10.8 billion) compared to the estimated KRW 14 trillion, while revenue rose to KRW 77.2 trillion.
Shares of the company were up 0.16% at the close on Thursday.
Currencies and Oil
The US Dollar Index, which tracks the greenback against a basket of its peers, came in at 106.268. It fell sharply after the Fed hiked interest rates.
The Japanese yen rose to 135.45 per dollar after weakening above the 137 level this week. The Australian dollar was stronger at $0.70 as the US dollar weakened.
Oil futures were higher in Asia on Thursday afternoon. US crude was up 1.67% to $98.88 a barrel, while Brent crude was up 1.18% to $107.88 a barrel.
– CNBC’s Jeff Cox, Tanaya Macheel, Carmen Reinicke and Arjun Kharpal contributed to this report.