Asia report: Markets higher as Fed keeps policy on hold

Most markets in Asia closed in the green on Thursday, as the Fed stood pat on its monetary policy, with interest rate targets remaining near zero.

In Japan, the Nikkei 225 was up 0.21% at 29,053.97, as the yen weakened 0.4% against the dollar to last trade at JPY 109.03.

Technology giant SoftBank Group was down 1.48%, while among the benchmark’s other major components, robotics specialist Fanuc was up 2.03% and Uniqlo owner Fast Retailing gained 0.44%.

The broader Topix index was 0.29% firmer by the end of trading in Tokyo, closing at 1,909.06.

On the mainland, the Shanghai Composite was 0.52% higher at 3,474.90, and the smaller, technology-centric Shenzhen Composite rose 0.2% to 2,305.65.

South Korea’s Kospi was the region’s odd one out, falling 0.23% to 3,174.07, while the Hang Seng Index in Hong Kong gained 0.8% to 29,303.26.

Apple suppliers were in focus during the session, after the California-based consumer technology giant reported a 54% jump in quarterly sales overnight.

AAC Tech eked out gains of 0.23% in Hong Kong, while South Korean screen maker LG Display fell 3.63% in Seoul.

The blue-chip technology stocks were mixed in Korea, with Samsung Electronics down 0.49%, while SK Hynix closed flat.

Investors spent the early parts of the day digesting the latest policy decision from the Federal Reserve in the United States, which maintained interest rate targets near zero and confirmed it would continue to buy at least $120bn of bonds on a monthly basis.

That standstill on policy came even as the Fed acknowledged the strength shown by the US economy in the early months of 2021, and offered no signals that its policy would change in the foreseeable future.

The central bank’s chairman Jerome Powell described the economic recovery as “uneven and far from complete”, noting that a likely uptick in prices in the coming months were likely to be one-time movements, with a minimal impact on real inflation.

“It will take some time before we see substantial further progress,” Powell said after the two-day meeting of the Federal Open Market Committee.

IG chief market analyst Chris Beauchamp said stock markets had “taken heart” from the Fed, after it poured cold water on the idea of any upcoming change in policy.

“The dialogue of the deaf goes on in markets, with the Fed patiently restating its view of future policy and investors refusing to listen; what is particularly tiresome is the knowledge that this discussion about tapering and the like will go on ahead of each meeting in the months to come, and yet no real change is likely for quite some time,” he said.

“Thus the Fed, which under Jerome Powell has tried to be as clear as possible, will continue to ostensibly ‘surprise’ markets by doing exactly what they said they would do, i.e. nothing.

“That this continues to be a talking point perhaps says more about the investing community than it does the world’s most powerful central bank.”

Oil prices were higher as the region went to bed, with Brent crude last up 1.03% at $67.96 per barrel, and West Texas Intermediate up 1% at $64.50.

In Australia, the S&P/ASX 200 was 0.25% stronger at 7,082.30, while across the Tasman Sea, New Zealand’s S&P/NZX 50 advanced 0.55% to 12,715.20.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.16% at AUD 1.2855, and the Kiwi retreating 0.19% to NZD 1.3794.