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Asian Equities Advance After Fed Says It Will Be Patient With Rate Hikes

Investing.com - Asian equities advanced in morning trade on Thursday following the U.S. Federal Reserve’s decision to keep interest rate

Investing.com - Asian equities advanced in morning trade on Thursday following the U.S. Federal Reserve’s decision to keep interest rate steady after a two-day meeting.

China’s Shanghai Composite and the SZSE Component rose 0.6% and 0.5% respectively by 10:55 PM ET (03:55 GMT). Hong Kong’s Hang Seng Index also gained 1.1%.

The gain in Chinese stocks came even after the National Bureau of Statistics (NBS) reported on Thursday that China’s factory activity shrank for the second straight month.

The official Purchasing Managers' Index (PMI) came in at 49.5 in January, the reading was slightly higher than the 49.4 in December, but still below the 50-mark that separates growth from contraction.

Meanwhile, the services PMI for January came in at 54.7, better than the 53.8 reported in the previous month.

"While the official manufacturing PMI didn't weaken any further in January, it still suggests that the economy lost momentum at the start of the year," Marcel Thieliant, senior economist at Capital Economics, wrote in a note that was cited by CNBC.

South Korea’s KOSPI edged up 0.2%. Index heavyweight Samsung Electronics Co Ltd (KS:005930) made headlines after the company posted a 29% drop in fourth-quarter operating profit.

The company also expected its “overall annual earnings to decline”, and that memory demand was expected to remain weak in the first quarter, according to a company statement.

Separately, U.S. Secretary of State Mike Pompeo told Fox News on Wednesday the next summit between President Donald Trump and his North Korean counter Kim Jong Un will be held in Asia in February.

"I am dispatching a team there. They're headed that way now to lay the foundations for what I hope will be a substantial additional step towards the path for not only denuclearization of the peninsula but a brighter future for the North Korean people," Pompeo said.

Elsewhere, Japan’s Nikkei 225 jumped 1.2%, while Australia’s ASX 200 was unchanged at 5,886.9.

Overnight, the U.S. Fed voted unanimously to hold its policy rate in a range between 2.25% and 2.5% as expected.

The central bank added that it would be “patient” with future rate hikes.

"In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes," the statement said.