BEIJING (AP) – Chinese stocks gained Thursday following this week’s turbulence and other Asian markets rose after the U.S. Federal Reserve left interest rates unchanged at a record low.
KEEPING SCORE: The Shanghai Composite Index was up 0.7 percent at 3,816.60 and Hong Kong’s Hang Seng added 0.2 percent to 24,659.75. Tokyo’s Nikkei 225 gained 1.1 percent to 20,522.83 while Seoul’s Kospi shed 0.9 percent to 2,019.03. Sydney’s S&P/ASX 200 gained 0.8 percent to 5,670.10. Taiwan, Manila, Jakarta and New Zealand also gained while Singapore fell.
CHINA’S GYRATIONS: The Shanghai benchmark suffered its biggest one-day drop in eight years on Monday when it plunged 8.5 percent despite government intervention to stem a slide in stock prices. The index fell further before rebounding 3.5 percent on Wednesday. Analysts say the volatility is a sign economic fundamentals cannot support stock prices at their current level. Other say even if the intervention restores confidence, markets are likely to face turbulence in coming weeks before prices settle down.
FED DECISION: Fed policymakers voted Wednesday to leave interest rates unchanged and gave no indication a rise was imminent. The Fed said the U.S. economy is improving but signaled that it wants to see further economic gains and higher inflation before raising rates. Many investors expect the Fed will still lift rates in September or December, but its statement gave no timing for the raise. Low interest rates have been good for stock investors, helping fuel a bull market that has lasted more than six years.
THE QUOTE: “You have to hand it to the Federal Reserve. They look primed to put up the fed funds rate in September, perhaps December. Yet at the same time, equities looks supported and the yield curve remains unchanged,” said IG chief strategist Chris Weston in a market commentary. “If the object of its communication exercise is to ease the market into a normalization process without causing a stir in capital markets, then you would give their performance a nine out of ten.”