Indexes trade higher as investors react to Fed minutes

SINGAPORE — Asia-Pacific markets were mostly higher on Thursday as investors watch for market reaction to the latest Fed minutes.

In South Korea, the Kospi advanced 1.83% after closing more than 2% lower on Wednesday, and the Kosdaq climbed around 1.43%.

Samsung Electronics shares rose 3.19% after the company released earnings guidance for the second quarter of 2022. Operating profit likely rose to 14.1 trillion won ($10.8 billion) in the April to June quarter, up from 12.57 trillion won a year ago.

Japan’s Nikkei 225 gained 1.44%, and the Topix index rose 1.39%.

The S&P/ASX 200 was up 0.45%. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.88% higher.

Mainland China markets were higher. The Shanghai Composite rose 0.51%, and the Shenzhen Component climbed around 1%. Both indexes fell on Wednesday as Covid concerns came back into focus.

Beijing city said Covid vaccinations would be required to enter sports centers, entertainment venues and more starting next week.

Hong Kong’s Hang Seng index was one of the few losers in the region, slipping 0.41%.

It’s really just clear they’re on this rate hiking path purely until inflation cools off.

Anthony Raza

Head of multi-asset strategy, UOB Asset Management

Federal Reserve officials recognized that a “more restrictive stance” in policy could be suitable if inflation doesn’t ease, even if it slows the economy, the meeting minutes said.

“Participants recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2 percent as critical to achieving maximum employment on a sustained basis,” the document said.

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Fed officials also said a hike of 50 or 75 basis points would be likely at the July meeting.

The Federal Open Market Committee is concerned about inflation expectations becoming unanchored, a ANZ research note said on Thursday.

“The Fed is understandably eager to reinforce to the public that it has got this, and hiking 75bp [and signaling many more hikes to come] certainly reinforces the message,” the note said.

Anthony Raza of UOB Asset Management told CNBC’s “Squawk Box Asia” on Thursday that the Fed’s “hands are tied at this point.”

“It’s really just clear they’re on this rate hiking path purely until inflation cools off,” said Raza, who is head of multi-asset strategy. “I think that’s going to be a slow process,” he added, estimating that it will take around a year.

US markets gained slightly on Wednesday stateside.

The Dow Jones Industrial Average rose 69.86 points, or 0.23%, to 31,037.68. The S&P 500 advanced 0.36% to 3.845.08, and the Nasdaq Composite traded 0.35% higher to close at 11,361.85.

Currencies and oils

The US dollar index, which tracks the greenback against a basket of its peers, was at 106,870.

The Japanese yen traded at 135.73 per dollar, and the Australian dollar was at $0.6817.

Oil futures recovered earlier losses to rise in Asia trade after tumbling on Tuesday and Wednesday.

US West Texas Intermediate futures gained 0.52% to $99.04 per barrel, and Brent crude futures climbed 0.54% to $101.23 per barrel.

The US crude benchmark settled 1% lower on Wednesday after an 8% tumble on Tuesday. The international benchmark settled 2% down at $100.69 after falling below the $100 level during Wednesday’s session.

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