Asian stocks rise on Yellen speech
Asian stocks rose after Federal Reserve chair Janet Yellen said the central bank is on track to raise interest rates this year.
“Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter,” Yellen said during a speech Thursday in Massachusetts. “But if the economy surprises us, our judgments about appropriate monetary policy will change.”
The MSCI Asia Pacific Index added 0.2 percent to 125.08 as of 4:09 p.m. in Hong Kong. The regional benchmark measure has fallen 14 percent since the end of June, on course for its worst quarter in four years, as the Fed prepares to raise rates with financial markets rattled by concern slowing Chinese growth.
“What we’ve heard from Janet Yellen has done a lot to settle the market,” Kerry Craig, a Melbourne-based global strategist at JPMorgan Asset management, which oversees $1.7 trillion, told Bloomberg TV.
The Fed is “very willing to move on higher rates this year. Ultimately they know that is a good thing for the U.S. economy and a good thing for markets. We still favor an overweight to developed market equities -- this is an environment where risk is the place to be,” Craig said.
Tokyo shares closed higher Friday, shrugging off a weak Japanese inflation report on hopes for a weaker yen after Federal Reserve Chair Janet Yellen hinted at a US rate hike by the end of 2015.
The benchmark Nikkei 225 index recovered in the afternoon after Yellen said overnight that improvements in the US economy “will likely entail an initial increase in the federal funds rate later this year.”
Her remarks came a week after the US central bank opted at a widely anticipated meeting against enacting the first rate hike in nearly 10 years.
Japan’s Topix index added 1.9 percent as investors bought shares ahead of a deadline to ensure they received dividend payments.
Prime Minister Shinzo Abe unveiled a new economic growth target Thursday and vowed to halt the nation’s population slide. The premier laid out three new “arrows” of his Abenomics plan: a strong economy, increased support for families with children, and social security.
Hong Kong’s Hang Seng Index advanced 0.4 percent and the Hang Seng China Enterprises Index of mainland firms listed in the city gained 0.5 percent.
Macau casino companies tumbled in Hong Kong this week amid concern gaming revenue will continue to be curbed as junket operators reduce credit offered to high-end gamblers.