On Tuesday morning, June 22, most Asia Pacific stocks were up since an emerging possibility that the Fed’s policy tightening could be more gradual than expected.
This diminished investors’ fears of the US Federal Reserve’s latest hawkish shift.
The Japanese index led the gain among Asia’s major markets as the Nikkei 225 soared 3.03%.
This was followed by Australia’s ASX 200 jumping 1.41% and South Korea’s KOSPI, which progressed 0.69%.
Consequently, Hong Kong’s Hang Seng Index also rose 0.01%.
The same with China’s Shanghai Composite, which advanced 0.76%.
Meanwhile, the Shenzhen Component is the only one that plunged 0.19%.
The MSCI index of the Asia Pacific region’s shares outside Japan increased 0.37%.
Also, investors continue to evaluate the outlook as the focus stays on inflation and the risks caused to the US economy by the coronavirus pandemic.
Fed chief Jerome Powell admitted in written remarks that there was a surge in inflation.
However, he also foretold that the inflation might bounce back towards the central bank’s 2.00% target.
This will happen after the resolution of the imbalances in supply.
Later in the day, he will testify before a House of Representatives subcommittee hearing on the Fed’s pandemic emergency lending and asset purchase program.
Other Fed officials reiterated New York Fed President John Williams’ outlook that the previous surge in inflation is just temporary.
However, Dallas Fed President Robert Kaplan favored starting the reduction of bond purchases sooner than later.
This echoed St. Louis Fed President James Bullard’s statement that it is appropriate for the central bank to begin the asset tapering.
An analyst said that even though Fed officials’ comments differ, the best thing to do right now is to invest in the equity markets.
Japan Shares Spiked
The shares of Japan spiked as Wall Street rebounded from its previous losses.
All of Nikkei’s 225 shares climbed and the index jumped to 28,822.28.
The shipping sectors led the gain as it advanced 8.50% following Mitsui OSK Lines’ over tripled its forecast for six-month net income to ¥170 billion ($1.54 billion).
The company is also among the best-performing stocks on the Topix, which soared 9.40%, touching its decade high.
Its rival Kawasaki Kisen, boosted 8.60%, which is also reaching a decade high.
Also, Nippon Yusen rallied 8.20%.
The wider Topix index improved 2.90%, which reverses its Monday’s downfall of 2.40%.
Value stocks were outperformed as the Topix Value index smashed 3.00% in comparison to the Topix Growth index’s 2.70% increase.