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Asian stocks close higher after US Fed raised growth rates

The Hang Seng Index and Nikkei 225 ended Thursday’s session 1.28% and 1.01% higher respectively.

  • Asian stocks rallied on Thursday (18 March), with the Hang Seng Index and Nikkei 225 concluding over 1% higher
  • Both benchmarks took their cue from the S&P 500 and Dow Jones Industrial Average, which closed at record highs a day earlier
  • US equities were boosted by the US Federal Reserve’s decision to keep interest rates near zero through 2023
  • The central bank also improved its economic recovery outlook for 2021
  • Trade the Hang Seng Index or Nikkei 225 index with an IG account

Asian stocks rose on Thursday (18 March 2021), after US equities closed higher in light of the US central bank’s dovish stance on keeping interest rates unchanged.

On Wednesday, the US Federal Reserve reiterated its decision to keep overnight borrowing rates at near zero through the year 2023. The Fed also improved its economic growth outlook for 2021 to 6.5%, while keeping a tolerant stance on inflation.

Following that, both the S&P 500 and Dow Jones Industrial Average finished the day at record highs.

Hang Seng Index: +1.28%

Hong Kong equities extended an ongoing rally on Thursday, mirroring the gains recorded across the Pacific.

The Hang Seng Index closed 1.28% higher at 29,405.72. It is also up 2.6% since the start of the week.

This was the fourth straight session that the bluechip barometer has advanced, making it the longest winning streak in a month.

Meanwhile, the Hang Seng Tech Index, which represents the 30 largest technology companies listed in Hong Kong, also climbed 1.2% to 8,676.33 in the same session.

Chinese e-commerce group Alibaba and optical device manufacturer Sunny Optical Technology led the rally, with their share prices burgeoning as much as 7% and 11% earlier in the day.

Technology-focused investment holding company Meituan also saw shares grow by more than 5%.

In mainland China, the Shanghai Composite Index and Shenzhen Composite Index closed the day 0.51% and 1.12% higher respectively.

Nikkei 225: +1.01%

Japan’s Nikkei 225 also fared well with this latest injection of optimism, concluding the day 1.01% higher at 30,216.75.

The index had hit an intraday peak of 30,471.59 in the morning, only to fall under 30,100 after lunch break, after a Nikkei report suggested that the Bank of Japan (BOJ) could allow its 10-year government bond (JGB) yields to widen to 0.25% from the current 0.2%.

By allowing yields to fluctuate more, the BOJ will help to ease the strain of ultra-low interest rates and a flattening yield curve inflict on financial institutions' profits, according to the article.

‘JGB yields will likely face upward pressure. Markets may check to see whether the BOJ will tolerate rises in 10-year yields to 0.25%, or even 0.3%,’ Yuichi Kodama, chief economist at Meiji Yasuda Research Institute told Nikkei.

Despite the decline in the afternoon, Thursday represented the ninth consecutive session that the Nikkei 225 had increased.

Top performers were: Taiheiyo Cement (+5.76%), SCREEN (+5.23%) and Mitsubishi UFJ Financial Group (+5.15%).

How to trade indices with IG

Are you feeling bullish or bearish on the Hang Seng Index and Nikkei 225?

Either way you can buy (long) or sell (short) the asset using IG's industry-leading trading platform, in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Hong Kong HS50> or <Japan 225> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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