By Gina Lee
Investing.com – Asia Pacific stocks were mixed on Thursday morning, with investors assured that the U.S. Federal Reserve’s monetary policy tightening will tackle inflation without derailing the economic recovery from COVID-19.
Japan’s Nikkei 225 jumped 1.53% by 9:17 PM ET (2:17 AM GMT) and South Korea’s KOSPI gained 0.44%.
In Australia, the ASX 200 fell 0.53%. Thursday’s employment data showed that the employment change was at 366,100 and the full employment change at 128,300, while the unemployment rate was 4.6%, in November.
Hong Kong’s Hang Seng Index fell 0.58%. Chinese companies listed in the U.S. saw their shares slide on Wednesday to their lowest levels since March 2020, with the U.S. likely to slap more companies with investment and export sanctions.
China’s Shanghai Composite gained 0.46% while the Shenzhen Component edged down 0.10%.
The Fed will double the pace of its asset tapering program to $30 billion a month, it said in its policy decision handed down on Wednesday. The central bank kept its interest rate steady but projected three quarter-point interest-rate increases in 2022, another three in 2023, and two more in 2024.
Although the policy decision lifted some uncertainty about the Fed’s response, some warned that it could take time for the full picture to emerge.
“The initial market reaction does not always stick, but we suspect that both the Fed and investors are satisfied that the Fed is aware of and responding to inflation risks, while taking a measured, data-dependent approach in responding,” Standard Chartered Bank head of global G10 FX research Steve Englander said in a note.
The Fed still faces challenges in bringing inflation down to its 2% target, with the five-year breakeven rate on U.S. Treasury inflation-protected securities approaching 2.8%. However, other investors remained optimistic.
“If there is a story here, it’s that the Fed is moving forward but they are not going to do anything rash to kill this market move forward that we’ve had over the last year. They are not looking to disrupt the kind of environment that we’ve had and that’s good news for markets,” Credit Suisse Group AG chief U.S. equity strategist Jonathan Golub told Bloomberg.
Investors now await policy decisions from the European Central Bank and Bank of England later in the day. The Bank of Japan will hand down its decision on Friday.
On the COVID-19 front, the omicron variant will likely be the dominant coronavirus variant in Europe by mid-January 2022, European Commission President Ursula von der Leyen predicted.