TOKYO, Nov 29 2018 : Asian stocks rose today tracking a Wall Street rally as dovish comments from Federal Reserve Chair Jerome Powell boosted investor sentiment towards riskier assets.
The dollar sagged against its peers on Powell’s comments, which suggested the Fed’s interest rate hike cycle may come to an end faster than initially anticipated.
The Fed chair said yesterday that U.S. policy rates were “just below” neutral, less than two months after saying rates were probably “a long way” from that point.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent. Australian stocks gained 0.8 percent and Japan’s Nikkei climbed 0.9 percent.
The Dow rallied 2.5 percent and Nasdaq surged nearly 3 percent on Wednesday as Powell’s comments eased concerns of a faster pace of rate hikes in 2019.
“Equities gained as Powell hinted of implementing fewer rate hikes when the economy is still doing well,” said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
“The likelihood slower U.S. monetary tightening caused the dollar to slump against currencies, particularly the euro, which could soon benefit from an ECB rate hike.”
The dollar was little changed at 113.57 yen after being knocked down from a two-week high above 114.00 scaled overnight.
The Australian dollar, sensitive to shifts in broader risk sentiment, jumped more than 1 percent on Wednesday and last stood at 0.7306.
The dollar index against a basket of six major currencies was effectively flat at 96.828 following an overnight loss of 0.6 percent.
The U.S. two-year Treasury yield extended a modest decline from the previous day following Powell’s comments. The yield was down 1 basis point at 2.802 percent.
In commodities, U.S. crude futures were up 0.7 percent at $50.65 per barrel, paring some losses after sliding 2.5 percent the previous day.
Oil prices sank yesterday after U.S. crude inventories rose for the 10th straight week to the highest in a year, adding to worries about a worldwide supply glut. – Reuters