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Asian shares firm, dollar bruised as Fed hike dashes more hawkish bets


By Alun John

HONG KONG (Reuters) – Asian shares tracked Wall Street gains on Thursday after the U.S. central bank raised interest rates by 50 basis points but sounded a less hawkish tone than some had feared, lifting investor sentiment but sending yields and the dollar lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.52%, although trading was thin with Japanese and Korean markets closed for public holidays.

Crude prices, meanwhile, shot up as the European Union spelled out some of the details of its plan to ban the use of Russian oil, heightening concerns about supply.

Early moves in Asia followed a U.S. rally overnight where the Dow Jones Industrial Average rose 2.81%, the S&P 500 gained 2.99%, and the Nasdaq advanced 3.19%. [.N]

“Markets appeared to breathe a sigh of relief following the Fed’s 50 basis point hike and Powell’s comment that a 75bp isn’t something the (Fed’s policy committee) is currently considering,” said ANZ analysts.

In Asia, the focus shifts to mainland Chinese markets, which return from a three-day break on Thursday with investors watching closely to see if tech-led gains made just before the break hold.

Chinese names rallied after Beijing signaled an easing of its crackdown on the once-freewheeling tech sector and pledged policy support for the world’s second-largest economy.

This week, Hong Kong stocks have edged lower while the offshore Chinese yuan has been volatile though still stronger than it was last week. (HK)

The Federal Reserve raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years. Fed Chair Jerome Powell said policymakers were ready to approve half-percentage-point rate hikes at upcoming policy meetings in June and July.

However, Powell also said the Fed was not “actively considering” a 75 basis-point rate hike, tempering some market expectations for an aggressive tightening path.

That sent the dollar lower, where it stayed in early Asia.

The dollar index, which measures the greenback against six peers, was at 102.56, having been as firm as 103.63 on Wednesday.

U.S. Treasuries were not trading because of the holiday in Japan, but also fell overnight. The benchmark 10 year yield was last 2.9402%, down from just over 3%.

Oil extended gains on Thursday after the European Union, the world’s largest trading bloc, on spelled out plans to phase out imports of Russian oil

U.S. crude futures gained 0.5% to $108.36 a barrel and Brent rose 0.6% $110.8. Both benchmarks rose over $5 a barrel on Wednesday. [O/R]

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