ROME: Asian markets were mostly higher Monday as investors digested Fed chief Janet Yellen’s comments signaling U.S. interest rates were expected to rise sometime this year but when they did they would do so gradually.
Japan’s benchmark Nikkei 225 index was up 0.5 percent to 19,378.52 while South Korea’s Kospi gained 0.3 percent to 2,024.57. Hong Kong’s Hang Seng jumped 1.2 percent to 24,792.41 while the Shanghai Composite Index in mainland China rose 0.8 percent to 3,722.04. Australia’s S&P/ASX 200 lost 1.3 percent to 5,840.20. Southeast Asian benchmarks were higher while New Zealand declined.
Asian investors were getting their first chance to react to Yellen’s comments on Friday. In a speech in San Francisco she said the time to start raising the key U.S. interest rate could occur “sometime this year,” though she said that time has yet to arrive. She said the danger associated with raising rates too fast is greater than that of acting too slowly. A too-rapid approach could cause the economy too stall, she said.
“Friday’s comments from Yellen successfully managed to frame where we are in terms of U.S. monetary policy, striking the middle path that we had expected,” said Michel Every, head of Asia Pacific financial market research at Rabobank. “That’s a far, far more cautious, data-dependent stance towards changes in the Fed Funds rate than some of the more gung-ho rhetoric that other Fed members have been coming out with recently.”