Berliner Boersenzeitung - Markets rally again as Hong Kong extends surge

Regional sentiment remains buoyant after China's top economic official vowed measures to support beaten-down markets and indicated that a debilitating crackdown on the technology sector was nearing its end.

The news lit a fire under Asia on Wednesday -- sending Hong Kong's Hang Seng Index rocketing more than nine percent and the city's tech gauge flying by a record 22 percent.

That provided a platform for traders in Europe and New York, where an index of US-listed Chinese firms ended up 33 percent.

And the buying continued in early business on Thursday, with the HSI piling on seven percent with market heavyweight tech titans including Alibaba, Tencent and JD.com building on their eye-watering rallies.

Companies in other sectors that have been in Beijing's cross hairs over the past year, such as casinos and developers, also extended a rally.

"The statement addressed so many issues on various fronts, which is really rare," Ding Shuang at Standard Chartered said.

"Selloffs tended to be self-fulfilling partly because of the lack of response from the government," but part of the government's aim is likely to break that inertia and stabilise expectations, he added.

Adding to the broadly positive mood on trading floors were hopes that Ukraine and Russia were edging towards a ceasefire in a war that has sent markets spiralling and fears over inflation soaring with commodity prices.

Traders have grown increasingly worried that the spike in inflation and war in Europe will knock off-course an already fragile pandemic recovery, providing a headache for central bankers who are trying to rein in ultra-loose monetary policies.

And the Fed appeared to soothe some of those worries Wednesday when it lifted interest rates -- by a quarter of a point -- for the first time since 2018 but gave an upbeat review of the world's number-one economy.

Governor Jerome Powell said there was little chance of a recession in the next year and noted that it was "very strong and well positioned to handle tighter monetary policy".

He told reporters after the rate hike: "We're not going to let high inflation become entrenched. The costs of that would be too high."

The Fed was committed to using its "powerful tools" to prevent that, he added, while a gauge of future hikes suggested another six could be on the cards before the end of the year.

"The (policy board) was interpreted as hawkish, but expectations ran high for that scenario," said Stephen Innes of SPI Asset Management.

"Perhaps getting the event out of the way without a significant shock was enough to keep risk supported and, potentially, the dollar on the back foot.

"Risk assets could be interpreting this arguably 'too aggressive'. I think it's too early to panic on that front, 25 basis points is not a dramatic initial tightening and... the Fed maintains its flexibility.

"The last thing the Fed wanted to do was to err on the side of caution, which would have crushed their credibility.

"I think the Fed's hawkish tone is pushing away worries of the Fed behind the curve and inflation out of control. And stock markets like that."

After the healthy gains on Wall Street, Asia picked up the baton happily.

Tokyo charged more than three percent higher, while Shanghai, Sydney, Seoul, Mumbai and Manila were all up more than one percent. Taipei put on three percent with gains also seen in Singapore, Bangkok and Wellington.

London rose at the open ahead of a Bank of England rate decision later in the day. Paris and Frankfurt also advanced.

"The overall message you got from the Federal Reserve today was very clear," Deutsche Bank's Alan Ruskin told Bloomberg Television.

"They want financial conditions to tighten. The issue there is, can you soft-land this thing? Historically, when the Fed tightens, you do get some hard landing somewhere."

- Key figures around 0820 GMT -

Hong Kong - Hang Seng Index: UP 7.0 percent at 21,501.23 (close)

Tokyo - Nikkei 225: UP 3.5 percent at 26,652.88 (close)

Shanghai - Composite: UP 1.4 percent at 3,215.04 (close)

London - FTSE 100: UP 0.5 percent at 7,325.70

Brent North Sea crude: UP 3.8 percent at $101.75 per barrel

West Texas Intermediate: UP 3.5 percent at $98.33 per barrel

Euro/dollar: UP at $1.1055 from $1.1038 late Tuesday

Pound/dollar: UP at $1.3176 from $1.3148

Euro/pound: DOWN at 83.88 pence from 83.90 pence

Dollar/yen: UP at 118.75 yen from 118.73 yen

New York - DOW: UP 1.6 percent at 34,063.10 (close)

(H.Schneide--BBZ)