February 22, 2024

South Korea Leading Gains in Asia after Fed Minutes Release

On Thursday, Asia-Pacific markets were trading higher, as investors were watching the reaction of the market to the release of the latest minutes of the Fed’s June meeting.

Markets higher

There was a 1.84% gain in the Kospi index in South Korea, after it had ended Wednesday more than 2% lower. Meanwhile, there was a 1.79% increase in the Kosdaq, as it ended the day at 757.97. There was a 3.19% rise in shares of Samsung Electronics after it released its earnings guidance for the April to June quarter.

According to the release, there was a rise in operating profit of the company in the second quarter to 14.1 trillion won, which was higher than 12.57 trillion won a year earlier. There was also a 1.47% gain in the Japanese Nikkei 225 index, as it closed the day at 26,490.53. A 1.42% increase was also seen in the Topix index, which ended the day at 1,882.33.

The Australian S&P/ASX 200 index had gone up by 0.81% to end the day at 6,648. There was also a 0.88% rise in the MSCI index of Asia-Pacific shares excluding Japan. Mainland Chinese markets also advanced for the day.

There was a 0.27% gain in the Shanghai Composite index, as it closed at 3,364.40. There was also a 0.972% gain in the Shenzhen Component, as it reached 12,935.85. Both indexes had recorded a decline on Wednesday because of COVID concerns rising in the country once more.

According to the announcements from Beijing, people would have to be vaccinated for entering entertainment venues and sports centers from next week onwards. The Hang Seng index in Hong Kong was also recovering from its losses and ended up trading flat in the final hour of trading.

The meeting minutes

As per the minutes of the US Fed’s meetings, the officials were aware that if inflation does not come down, they may have to adopt a more restrictive stance where policy is concerned. They would have to do so, even if it leads to a slowdown in the economy. The document said that participants know that economic growth could slow because of a firm policy, but they consider it crucial for inflation to stay at the 2% target.

The July meeting is going to see an interest rate hike of 50 or 75 basis points. Market analysts said that the Federal Reserve wants to reassure people that it has things under control and hiking the interest rate by 75 basis points would certainly send that message. It is apparent that the central bank is going to stick to this path until inflation comes down, a process that is going to take time.

Meanwhile, markets in the US also recorded gains with the Dow Jones Industrial Average recording gains of 0.23%, the Nasdaq Composite advancing by 0.35%, and the S&P 500 climbing up by 0.36%. The US dollar index was also doing well against a basket of its peers, as it stood at 106.847. Oil futures were lacking direction after they had declined on Tuesday and Wednesday.

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