Asian stocks rise as tech rallies on easing Fed fears; China lags
Investing.com-- Most Asian stocks rose on Thursday, buoyed by a rally in the technology sector as somewhat middling comments from the Federal Reserve spurred bets that the central bank was done with its run of interest rate hikes.
But Chinese stocks saw little gains, as a string of weak economic readings from the country kept traders largely averse.
While the Fed kept rates steady on Wednesday, comments from Chair Jerome Powell suggested that interest rates may not rise further this year, especially as the U.S. economy cools. This saw U.S. Treasury yields fall sharply in overnight trade, in turn boosting technology stocks.
A positive finish on Wall Street also provided a strong lead-in to regional stocks, as the NASDAQ logged solid gains on falling yields.
Tech-heavy Asian indexes were the best performers on Thursday, with Hong Kong’s Hang Seng and South Korea’s KOSPI up 1.8% and 2%, respectively. The KOSPI rose even as data showed that Korean consumer inflation grew more than expected in October.
U.S. Treasuries fell sharply in overnight trade after Powell said that while the Fed still had a long way to go before meeting its 2% inflation target, monetary conditions had tightened substantially in recent months.
Powell still left the door open for more potential hikes, but reiterated that they will be contingent on the path of the U.S. economy. Given that his comments came a few hours after the release of weaker-than-expected manufacturing activity data, investors bet that a cooling U.S. economy will stem any more rate hikes.
Higher rates weigh on tech stocks by diminishing their future earnings potential. This trend had battered the sector as the Fed hiked rates sharply over the past year.
Strength in tech stocks
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