Nasdaq 100 Soars as FOMC Signals Strong Economy. Hang Seng Index Sees “Policy Bottom”

NASDAQ 100, HANG SENG INDEX, ASX 200 INDEX OUTLOOK:

Dow Jones, S&P 500 and Nasdaq 100 indexes closed +1.55%, +2.24% and +3.70% respectively

The Fed raised interest rate by a quarter-point and pointed to six more hikes in the forthcoming meetings this year

Nasdaq 100, FOMC, Hang Seng Index, Asia-Pacific at Open:

The Nasdaq 100 index soared 3.7% on Wednesday as Jerome Powell painted a clearer picture about the Fed‘s tightening trajectory at the FOMC meeting. The central bank raised the interest rate by 25bps and signaled six more hikes in the forthcoming gatherings to tame inflation, in line with market expectations. It also anticipates to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting, likely in May. Powell also pointed to a “strong economy” that is able to withstand the Fed’s tightening policy.

Meanwhile, Chinese policymakers made an unusual announcement to support the stock and property market on Wednesday, sparking an astonishing rally in both mainland and Hong Kong shares. The Hang Seng Index jumped the most since 2008 after China's state council pledged to support stock markets. The Hang Seng Tech Index rallied 22%and marked its largest single day gain. Chinese tech ADRs listed on US exchanges extended the rally overnight, led by Alibaba (+36.7%), JD.COM (+39.4%) and Tencent (+33.4%).

The Financial Stability and Development Committee of the State Council held a special meeting to study the current economic situation and capital market issues on Wednesday. The authorities pledged to support overseas stock listings and to keep Chinese capital markets stable. They also promised to implement measures to help handle risks for property developers. Regarding Chinese companies listed in the US, the Chinese and US regulators have maintained good communications and have made positive progress.

Positive signals sent by the state council marks a “policy bottom” for the Hong Kong stock market after a year-long selloff. The technology sector has lost 68% of its market value over the last 12 months due to Beijings anti-monopoly crackdown, US delisting threats and a slowing economy. As the state council made a “U-turn” in its attitude towards the platform companies such as Meituan and Alibaba, investors finally see lights at the end of the tunnel.

Hang Seng Tech Index - Daily