Asian stocks jump, dollar eases after Powell comments

Asian stocks rose on Thursday, while the dollar fell, after Federal Reserve Chair Jerome Powell said a "disinflationary" process was underway, boosting risk appetite and hopes that the United States' central bank will soon end its monetary tightening cycle.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.84 percent, while Japan's Nikkei rose 0.37 percent. The S&P/ASX 200 index in Australia gained 0.37 percent.

Chinese stocks were up 0.11 percent, while Hong Kong's Hang Seng Index was up nearly 1%.

After a year of larger hikes, the Federal Reserve of the United States announced an expected 25 basis point interest rate increase, saying it had turned a key corner in the fight against high inflation. However, policymakers predicted that "ongoing increases" in borrowing costs would be required.

Nonetheless, the market took a dovish cue from Powell's news conference. As a result, the S&P 500 and Nasdaq closed sharply higher overnight.

Powell appeared to dismiss easier financial conditions as a concern in his news conference, according to Ali Hassan, portfolio manager and managing director at Thornburg Investment Management.

"This was a signal that the market could buy without fear of upsetting the Fed."

The focus will now shift to Thursday's European Central Bank (ECB) and Bank of England (BOE) meetings, as well as the interest rate path that the two central banks are likely to take.

According to Saxo Markets strategists, the ECB has recently outperformed its peers in terms of hawkishness and is likely to do so again this week.

The BOE will be the most difficult due to indecisive market pricing and the possibility of a split vote.

Following Powell's remarks, the dollar fell sharply in the currency market, with the US dollar index, which measures the currency against six major peers, falling to a new nine-month low of 100.80. It was last recorded at 100.98.

The euro increased by 0.2% to $1.1011. The yen rose 0.22 percent to 128.65 per dollar, while sterling closed at $1.2372, down 0.03 percent on the day.
The yield on 10-year U.S. Treasury notes was up 1.5 basis point to 3.413 per cent, while the yield on the 30-year Treasury bond was up 1.3 basis point to 3.563 per cent.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 0.2 basis point at 4.108 per cent.

Spot gold added 0.2 per cent to $1,953.69 an ounce, having touched nine-month high of $1,957 per ounce earlier.

U.S. crude rose 0.93 per cent to $77.12 per barrel and Brent was at $83.48, up 0.77 per cent on the day.