BANGKOK—Shares were mostly higher in Asia on Thursday after a powerful rally across Wall Street sent the Dow Jones Industrial Average to a record high as the Federal Reserve indicated that interest rate cuts are likely next year.
Like the Fed, the European Central Bank and Bank of England were expected to keep their interest rate policies unchanged, as were the central banks of Norway and Switzerland.
Germany’s DAX jumped 0.8 percent to 16,899.27 and the CAC 30 in Paris was up 1.3 percent at 7,629.36. Britain’s FTSE 100 surged 2.2 percent to 7,715.35.
The future for the S&P 500 was up more than 0.2 percent and that for the Dow gained nearly 0.2 percent.
In Asian trading, Tokyo’s Nikkei 225 fell 0.7 percent to 32,686.25 as the U.S. dollar slipped to 141.70 Japanese yen from about 145 yen the day before. The value of the dollar tends to mirror expectations for interest rates, which affect returns on certain kinds of investments as well as borrowing. A weaker dollar undercuts the value of overseas profits for Japanese manufacturers.
Toyota Motor Corp.’s shares fell 3.8 percent and Sony Corp. lost 1.1 percent. Honda Motor Co. shed 5 percent.
Hong Kong’s Hang Seng index climbed 1.1 percent to 16,408.26, while the Shanghai Composite slipped 0.3 percent to 2,958.99 after a World Bank report forecast that the Chinese economy will post 5.2 percent annual growth this year but slow sharply to 4.5 percent in 2024. The report said the recovery of the world’s second largest economy from the setbacks of the COVID-19 pandemic and a downturn in the property sector was still “fragile.”
Australia’s S&P/ASX 200 jumped 1.7 percent to 7,377.90 and the Kospi in Seoul advanced 1.3 percent to 2,544.18. India’s Sensex was up 1.3 percent and the SET in Bangkok jumped 1.5 percent.
On Wednesday, the Dow jumped 512 points, or 1.4 percent, to 37,090.24. The S&P 500 rose 1.4 percent to within reach of its own record. The Nasdaq composite gained 1.4 percent.
Wall Street loves lower rates because they relax pressure on the economy and goose prices for all kinds of investments. Markets have been rallying since October as investors began hoping that cuts may be on the way.
Rate cuts particularly help investments seen as expensive or that force their investors to wait the longest for big growth. Some of Wednesday’s bigger winners were bitcoin, which rose nearly 4 percent, and the Russell 2000 index of small U.S. stocks, which jumped 3.5 percent.
Apple was the strongest force pushing upward on the S&P 500, rising 1.7 percent to its own record close. It and other Big Tech stocks have been among the biggest reasons for the S&P 500’s 22.6 percent rally this year.
The Federal Reserve held its main interest rate steady at a range of 5.25 percent to 5.50 percent, as was widely expected. That’s up from virtually zero early last year. It’s managed to bring inflation down from its peak of 9 percent while the economy has remained solid.
In a press conference Wednesday, Fed Chair Jerome Powell said the benchmark rate is likely already at or near its peak. He acknowledged, however, that inflation is still too high. Mr. Powell said Fed officials don’t want to wait too long before cutting the federal funds rate, which is at its highest level since 2001.
“We’re aware of the risk that we would hang on too long” before cutting rates, he said. “We know that’s a risk, and we’re very focused on not making that mistake.”
Prices at the wholesale level were just 0.9 percent higher in November than a year earlier, the government reported Wednesday. That was softer than economists expected.
Treasury yields tumbled in the bond market. The yield on the 10-year Treasury dropped to 3.95 percent early Thursday from 4.21 percent late Tuesday. It was above 5 percent in October, at its highest level since 2007. The two-year yield, which moves more on expectations for the Fed, sank to 4.43 percent from 4.73 percent.
In other trading, benchmark U.S. crude oil gained $1.34 to $70.81 per barrel in electronic trading on the New York Mercantile Exchange. It picked up 86 cents to $69.47 on Wednesday.
Brent crude, the international standard, was up $1.51 cents at $75.77 per barrel.
The euro rose to $1.0908 from $1.0876.
