Asian Stocks Mixed, but Fed’s Hawkish Tilt Increases Investors’ Risk Appetite By Investing.com

By Gina Lee

Investing.com – Asia Pacific stocks were mixed on Thursday morning, with investors assured that the will tackle inflation without derailing the economic recovery from COVID-19.

Japan’s jumped 1.53% by 9:17 PM ET (2:17 AM GMT) and South Korea’s gained 0.44%.

In Australia, the fell 0.53%. Thursday’s employment data showed that the was at 366,100 and the at 128,300, while the was 4.6%, in November.

Hong Kong’s 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 gained 0.46% while the edged down 0.10%.

The Fed will double the pace of its asset tapering program to $30 billion a month, it said in its handed down on Wednesday. The central bank kept its interest rate steady at 25% 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 and later in the day. The 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.