Hong Kong Stocks climb after Fed signals dovish view

Hong Kong stock market finished session higher on Thursday, 18 March 2021, as investors sentiment was lifted following the U.S. Federal Reserve ramped up its US growth outlook and again pledged to maintain its monetary easing policy and keep its key interest rate near zero through 2023.

At closing bell, the benchmark Hang Seng Index was up 1.28%, or 371.60 points, to 29,405.72. The Hang Seng China Enterprises Index added 0.98%, or 111.77 points, to 11,470.43.

The US central bank showed an optimistic view about the outlook for the American economy, but Federal Reserve Chair Jerome Powell cautioned a full recovery remains far off. The US Federal Reserve continues to provide dovish guidance and is keeping its policy Fed fund rate close to 0% through 2023. It will maintain the pace of its pace of quantitative easing programme via its US$120bn monthly purchase of bonds, despite an economic growth outlook upgrade on its latest dot plot that projected US 2021 GDP growth to be at 6.5% (the strongest since 1983) from a prior projection of 4.2% in the December 2020 FOMC meeting. In addition, the US labour market is expected to improve, with the median estimate for unemployment to decline to 4.5% towards the end of 2021, dipping further to 3.5% in 2023. The Fed downplayed the risk of inflationary pressures, and only expect a bump in inflation to 2.4% in 2021 before slowing to 2% in 2022, excluding food and energy.

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