Asian shares edge up as oil retreat offsets expected Fed hike

The subdued response across the two bourses indicates a rate move that had been completely discounted well in advance, shifting attention to crude and BOJ policy positioning as the primary influences on Thursday's trading. The dip in oil prices following the Saudi supply rerouting is doing more to lift sentiment than the Fed's decision itself, echoing the Korean analyst's point that Treasury yields and crude, not further Fed action, are the factors to monitor. Japan's softer tech sector ahead of Friday's anticipated BOJ decision suggests the next significant challenge for the region will come from domestic policy rather than external shocks, with any BOJ surprise likely having a greater impact on Tokyo than any further Fed moves this year.

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Asian markets brushed aside a fully anticipated Fed hike and took direction from falling oil prices.

Summary:

• Japan's Nikkei added roughly 0.2%, after earlier gaining as much as about 1% intraday; the broader Topix climbed around 0.6%
• Brent slid approximately 2.5% overnight on reports that Saudi Arabia is routing additional cargoes through Oman, reducing concerns about Middle East supply
• The Fed's quarter point increase arrived as expected, with signals pointing to another rise before year-end
• Tokyo's tech shares were weaker on caution ahead of Friday's BOJ meeting, where a quarter point hike is similarly anticipated, along with persistent worries about an AI spending pullback
• South Korea's Kospi opened about 1% higher near 6,790; the Kosdaq gained roughly 0.8% to around 823
• Samsung advanced about 1.4%; SK Hynix added around 0.7%; Korean markets saw the Fed hike as fully priced in rather than a fresh setback

Japan's Nikkei share average advanced on Thursday as investors picked up beaten-down gaming and pharmaceutical stocks, with support from lower crude prices and a Federal Reserve decision that matched forecasts. The index rose around 0.2%, after climbing as much as roughly 1% earlier in the day, while the Topix index added about 0.6%. Overnight, Brent crude dropped around 2.5% following reports that Saudi Arabia was offering extra barrels via Oman, easing concerns about a broader Middle East supply disruption. The Fed increased its benchmark rate by a quarter point as expected, while hinting at another hike later this year.

According to one strategist, the day's gains reflected factors that had slightly reduced broader market anxiety, though they warned that Japanese equities were not yet in a clearly strong position. Despite a broad-based advance across sectors, rate-sensitive technology stocks in Tokyo traded on a softer note, pressured by wariness ahead of the Bank of Japan's decision on Friday and ongoing worries about a possible slowdown in AI-related spending. The BOJ is widely anticipated to raise its policy rate by a quarter point at that gathering.

Earlier, before Japan's trading session had fully developed, South Korea's Kospi opened about 1% higher near 6,790, while the Kosdaq gained roughly 0.8% to around 823. Samsung Electronics, the market's most valuable company, traded near 257,000 Korean won, up about 1.4%, while SK Hynix rose around 0.7%. South Korean markets did not view the Fed's action as a negative surprise, as the quarter point increase had already been largely priced in before the announcement. One analyst said that for equities, the more important factors going forward are the movement of 10-year Treasury yields and global oil prices, rather than the prospect of another quarter point Fed hike.