BANGKOK– Stocks were mostly higher in Asia on Thursday after a powerful rally on Wall Street sent the Dow Jones Industrial Average to a record high after the Federal Reserve signaled interest rate cuts are likely next year.
The European Central Bank and the Bank of England were expected to leave their interest rate policies unchanged, as were the central banks of Norway and Switzerland.
In Asian trading, Tokyo's Nikkei 225 fell as the yen rose sharply against the U.S. dollar as a weaker dollar could hit the profits of Japanese exporters when they are brought back to Japan.
The Nikkei fell 0.7% to 32,686.25, while the dollar fell from around 145 yen to 142.14 yen, near its lowest level in four months. The value of the dollar generally reflects expectations of interest rates, which affect returns on certain types of investments and loans.
The shares of Toyota Motor Corp. fell 3.8% and Sony Corp. lost 1.1%. Honda Motor Co. lost 5%.
Elsewhere, Hong Kong's Hang Seng index rose 1.1% to 16,408.26.
The Shanghai Composite fell 0.3% to 2,958.99 after a World Bank report forecast that China's economy will post annual growth of 5.2% this year but will slow sharply to 4.5% in 2024 . The report said the world's second-largest economy's recovery from the setbacks of the COVID-19 pandemic were still 'fragile'.
The Australian S&The P/ASX 200 rose 1.7% to 7,377.90 and the Kospi in Seoul rose 1.3% to 2,544.18. India's Sensex rose 1.3% and Bangkok's SET also rose 1.3%.
On Wednesday, the Dow Jones rose 512 points, or 1.4%, to 37,090.24. The S&The P500 rose 1.4% to within range of its own record, closing at 4,707.09. The Nasdaq index also rose 1.4% to 14,733.96.
Wall Street likes lower interest rates because they ease pressure on the economy and raise prices for all kinds of investments. Markets have been rising since October as investors began hoping that cuts were on the way.
Interest rate cuts are especially beneficial for investments that are considered expensive or that force investors to wait the longest for big growth. Some of Wednesday's bigger winners were Bitcoin, which rose nearly 4%, and the Russell 2000 index of small U.S. stocks, which rose 3.5%.
Apple was the strongest force pushing the S up&P500, up 1.7% to its own record high. It and other Big Tech stocks are among the biggest reasons for the S&P 500's rally 22.6% this year.
The Federal Reserve held its key interest rate steady at a range of 5.25% to 5.50%, as widely expected. That is an increase compared to virtually zero at the beginning of last year. The country has managed to bring inflation down from a peak of 9%, while the economy has remained solid.
At a news conference Wednesday, Fed Chairman Jerome Powell said the key interest rate is likely already at or near its peak. However, he acknowledged that inflation is still too high. Powell said Fed officials don't want to wait too long to cut the federal funds rate, which is at its highest level since 2001.
“We are aware of the risk that we might hold on too long before cutting rates,” he said. “We know this is a risk, and we are very focused on not making that mistake.”
Wholesale prices were only 0.9% higher in November than a year earlier, the government reported on Wednesday. That was softer than economists expected.
Interest rates on government bonds fell on the bond market. The yield on the 10-year Treasury bond fell from 4.21% late Tuesday to 3.96% early Thursday. In October, interest rates were above 5%, the highest level since 2007. The two-year interest rate, which deviates more from the Fed's expectations, fell from 4.73% to 4.43%.
In other trading, U.S. benchmark crude rose 39 cents to $69.86 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the price rose 86 cents to $69.47.
Brent crude, the international standard, rose 50 cents to $74.76 a barrel.
The euro rose from $1.0876 to $1.0886.
