Stocks in Asia surge, dollar eases on Powell's 'disinflationary' comment

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Asian shares soared on Thursday while the dollar eased after Federal Reserve Chair Jerome Powell said a 'disinflationary' process was underway, boosting risk appetite as investors hope the climb in U.S. interest rates will come to an end soon.

Still, the market took a dovish cue from Powell's comments to a news conference on the "disinflationary" process being underway. That helped the S&P 500 and the Nasdaq close sharply higher overnight.

The prospect of a less aggressive pace in monetary tightening has raised expectations of a so-called soft landing - a scenario in which inflation eases against a backdrop of weakening but resilient economic growth.that his hopes for an economic soft landing, despite very aggressive interest rate rises, remain alive.

"Therefore the risk-on rally will potentially have room to run until economic data surprises substantially to jolt the soft landing narrative that the market has been relying on."The focus will now switch to European Central Bank and Bank of England meetings scheduled for Thursday and the interest rate path the two central banks are likely to take.

 

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