Asia shares rally on China tech surge, Fed confidence

HONG KONG • Asian stocks jumped yesterday as Chinese technology shares soared again and traders digested the Federal Reserve's view that the US economy is strong enough to weather its campaign against high inflation now under way.

The Hang Seng China Enterprises Index closed up 7.5 per cent, with technology and property shares among the top gainers after officials promised to ease a regulatory crackdown and pledged support for companies in the sectors.

On Wednesday, the gauge of Chinese firms listed in Hong Kong posted its biggest advance since 2008.

Yesterday, the Hang Seng Tech Index soared 7.8 per cent, after rocketing more than 20 per cent the day before. Singapore's Straits Times Index closed 1 per cent higher with the trio of local banks among the gainers.

The Fed interest rate hike is expected to drive local rates higher, which is likely to boost banks' loan margins.

Japan's Nikkei index finished 3.5 per cent higher, South Korea's Kospi index gained 1.3 per cent and Australia's S&P/ASX 200 Index rose 1.1 per cent.

Hong Kong's Hang Seng Index jumped 7 per cent while China's Shanghai Composite Index rose 1.4 per cent.

Chinese equities are staging a dramatic turnaround after Beijing on Wednesday vowed to keep its stock market stable and ease a regulatory crackdown.

Market watchers are now debating how sustainable this rebound can be, and whether equities have indeed reached a bottom.

Yesterday's gains come amid a broad rally in global stocks after the Fed on Wednesday raised rates for the first time since 2018 and signalled hikes at all six remaining meetings this year.

At the same time, in a press conference following the interest-rate decision, Fed chairman Jerome Powell gave the assurance that the United States economy will not tip into recession.

US markets on Wednesday initially shuddered after the quarter-point increase was announced but quickly found their footing as Mr Powell made a point of repeatedly affirming the pace of economic growth.

Defying their stock market counterparts, the US bond market is not buying Mr Powell's upbeat pronouncements on growth.

In fact, in the aftermath of Wednesday's policy decision, one bond market indicator of economic hardship is flashing red for the first time since the darkest days of the pandemic.

BLOOMBERG