Asian shares trade higher after Wall Street climbs moderately as Fed holds rates steady

TOKYO -- Asian shares rose moderately Thursday after a lackluster finish on Wall Street, with most shares ticking higher after the Federal Reserve left its main interest rate unchanged, as was widely expected.

Japan's benchmark Nikkei 225 edged up 0.4% in afternoon trading to 36,943.30. Australia's S&P/ASX 200 added 0.2% to 8,191.70. South Korea's Kospi rose 0.3% to 2,582.07. Hong Kong's Hang Seng surged 0.5% to 22,807.50, while the Shanghai Composite gained 0.3% to 3,353.81.

Investors continue to watch with trepidation President Donald Trump 's comments about the trade imbalance, as well as the reactions from various nations to appease the U.S. administration and the overall confusion over the long-term economic impact.

Geo-political tensions also weighed on market sentiments, centered around the standoff between India and Pakistan. Pakistan has said it will avenge those killed by India’s missile strikes, which New Delhi called retaliation for last month’s massacre of Indian tourists in India-controlled Kashmir. Pakistan called the strikes an act of war and claimed it downed several Indian fighter jets.

The missiles killed 31 people, including women and children, in Pakistan-administered Kashmir and the country’s Punjab province, Pakistan’s military said. The strikes targeted at least nine sites “where terrorist attacks against India have been planned,” India’s Defense Ministry said. Two mosques were hit.

On Wall Street, the S&P 500 gained 0.4%, coming off a two-day losing streak that had snapped its nine-day winning run. The Dow Jones Industrial Average added 284 points, or 0.7%, and the Nasdaq composite rose 0.3%.

Indexes swiveled repeatedly through the day, and the Dow briefly climbed as many as 400 points on hopes that the United States and China may be making the first moves toward a trade deal that could protect the global economy. The world’s two largest economies have been placing ever-increasing tariffs on products coming from each other in an escalating trade war, and the fear is that they could cause a recession unless they allow trade to move more freely.

The announcement for high-level talks between U.S. and Chinese officials this weekend in Switzerland helped raise optimism, but some of that washed away after Trump said he would not reduce his 145% tariffs on Chinese goods as a condition for negotiations. China has made the de-escalation of the tariffs a requirement for trade negotiations, which the meetings are supposed to help establish.

Such on-and-off uncertainty surrounding tariffs has helped create sharp swings within the U.S. economy, including a rush of imports in the hopes of beating tariffs. Underneath those swings, as well as surveys showing U.S. households are growing much more pessimistic about the future, the Fed said it continues to see the economy running “at a solid pace” at the moment.

Fed Chair Jerome Powell said that gives the central bank time to wait before making any potential moves on interest rates, even if Trump has been lobbying for quicker cuts to juice the economy.

“There’s so much that we don’t know,” Powell said. So like the rest of Wall Street and the world, the Fed is waiting to see what will actually end up happening in Trump’s trade war and whether his tariffs, which were much stiffer than expected, will hit as proposed.

That’s particularly the case after the trade war seems to be entering “a new phase,” Powell said, where the U.S. is conducting more talks on trade with other countries. The Fed also said it appreciates that risks to the economy are rising because of tariffs, which could both weaken the job market and push inflation higher.

“If the large increases in tariffs that have been announced are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment,” Powell said.

That could ultimately put the Fed in a worst-case scenario called “stagflation,” where the economy is stagnating while inflation remains high.

In the meantime, big U.S. companies continue to produce fatter profits for the start of 2025 than analysts expected. The Walt Disney Co. jumped 10.8% after easily beating analysts’ profit targets, raising its profit forecast and adding more than a million streaming subscribers.

All told, the S&P 500 rose 24.37 points to 5,631.28. The Dow Jones Industrial Average added 284.97 points to 41,113.97, and the Nasdaq composite gained 48.50 to 17,738.16.

In the bond market, Treasury yields fell following the Fed’s announcement. The yield on the 10-year Treasury eased to 4.27% from 4.30% late Tuesday.

In energy trading, benchmark U.S. crude gained 55 cents to $58.62 a barrel. Brent crude, the international standard, added 48 cents to $61.60 a barrel.

In currency trading, the U.S. dollar edged up to 144.14 Japanese yen from 143.76 yen. The euro cost $1.1285, down from $1.1317.

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AP business writers Damian J. Troise and Stan Choe contributed to this report.