Asian Markets Rose After Fed Rate Hike

Asian markets have risen after the US Federal Reserve raised interest rates for the first time since June 2006.

The Fed increased the range for its benchmark interest rate to between 0.25% and 0.5%, from the previous range of 0%-0.25%.

All major Asian stock markets were higher as the Fed said the US economy was “performing well”.

Japan’s benchmark Nikkei 225 share index closed 303.65 points higher, or 1.6%, at 19,353.56.

The dollar strengthened against the yen to 122.57 from 122.26 a day earlier, although it then fell back to 122.28 yen. A weaker yen is good for Japan’s big exporters.

In Australia, the S&P/ASX 200 index finished the day up 1.5% at 5,102.01, while in South Korea, the Kospi index closed 0.4% higher at 1,977.96.

The Fed’s decision to raise rates had been widely expected and analysts said it indicated a degree of optimism for the world’s biggest economy.

“The move signals confidence in the ongoing recovery in the US economy after the great financial crisis,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital in Sydney.

“Given ongoing deflationary risks and slow global growth, future Fed hikes are likely to be cautious and gradual.

“With the Fed decision out of the way, global shares are likely to resume their rising trend but with US shares as a relative underperformer.”

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza