Asian stocks rise, dollar falls after Fed hints at rate pause

On Thursday, Asian stocks edged higher and the dollar tumbled after the US Federal Reserve hinted that it might put a hold on interest rate hikes after the banking crash.

The Fed recently raised interest rates by 25 basis points but changed its outlook to a more cautious one as a result of banking stress.

The MSCI Asia-Pacific Index rose 1% to hit a two-week high of 515.62.

Traders and investors are now watching the Bank of England for a quarter of a percentage point hike in its policy rate after a spike in inflation dispelled hopes that the central bank would pause its tightening campaign.

The uptrend in Asia is unlikely to spread to Europe, where futures were trading lower at the open. Futures on the Eurostoxx 50 shed 0.53%, futures on the German DAX lost 0.32%, and futures on the FTSE fell 0.29%.

Wall Street plummeted overnight as traders and investors digested the Fed’s policy statement and Jerome Powell’s comments. E-mini S&P 500 futures rose 0.54%.

The Fed said in a statement that it was on the verge of pausing interest rate hikes, but Powell commented the central bank would do everything to curb inflation and continue raising if necessary.

Markets are currently estimating a roughly 65% chance of the Fed suspending its next meeting in May and a 35% chance of a 25 basis point uptrend, as shown by the CME FedWatch tool.

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In Asia, the Japanese Nikkei shed 0.22% and the Australian S&P/ASX 200 fell 0.61%.

China’s blue-chip CSI 300 rose 0.6%, while the Shanghai Composite added 0.8%. The Hong Kong Hang Seng index rose 1.5%.

Global markets fluctuated as bank stocks tumbled after the sudden bankruptcies of two US lenders and the emergency sale of Swiss banking giant Credit Suisse.

The dollar index fell almost 0.5% to 101.92. The euro rose 0.45% to $1.0904.

The yen gained 0.60% to hit 130.64 per dollar, while the pound sterling traded at $1.2325, up 0.50%.

The 10-year Treasury yield fell 6 basis points to 3.440%, while the 30-year Treasury slipped 3 basis points to 3.667%.

The yield on two-year US Treasury bonds fell 10 basis points to 3.881%.

US oil fell 1% to $70.19 a barrel, while Brent crude fell to $76.04, down 0.85%.