Stocks Cheer Dovish Fed, Yen Supported before BOJ Decision


Asian shares and U.S. stock futures rose on Thursday after the Federal Reserve committed to maintaining accommodative monetary policy and projected a rapid jump in U.S. economic growth this year as the COVID19 crisis eases.

MSCIs broadest index of AsiaPacific shares outside Japan rose 0.87, while stocks in China rose 0.74. Australias market bucked the trend and fell 0.73.

Emini futures for the SP 500 edged up by 0.7.

Euro Stoxx 50 futures were up 0.52, German DAX futures rose 0.75, and FTSE futures were up 0.4, pointing to a bright start to European trading.

While inflation is expected to reach 2.4 this year, above the central banks 2 target, Fed Chair Jerome Powell called it a temporary surge that will not change the Feds pledge to keep its benchmark overnight interest rate near zero.

Longterm Treasury yields remained elevated and the yield curve steepened as bond investors chose to focus more on rising inflation expectations.

The yen erased losses and government bond yields briefly rose after a media report that the Bank of Japan will agree to allow yields to trade in a wider band when it ends a twoday policy meeting on Friday.

If the Fed isnt going to induce tightening, its very bullish for risky assets, said Teresa Kong, head of fixed income and portfolio manager at Matthews Asia. We should be seeing a mild rally in Asian assets and currencies.

Shares in South Korea and Singapore also jumped more than 1, taking their lead from a strong session on Wall Street….

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