Asian shares advance after Fed signals US rate cut likely

Shares rose Thursday in Asia, tracking gains on Wall Street after Federal Reserve Chairman Jerome Powell suggested the U.S. central bank is ready to cut interest rates for the first time in a decade.

Hong Kong's Hang Seng jumped 1.2 percent to 28,539.74 while the Shanghai Composite index added 0.3 percent to 2,924.85. In Japan, the Nikkei 225 index climbed 0.5 percent to 21,638.58 while South Korea's Kospi advanced 1.2 percent to 2,083.79. Australia's S&P ASX 200 gained 0.3 percent to 6,717.70. Shares also rose in Taiwan and Southeast Asia.

"Local equity markets are reveling in the best of both worlds this morning as local investors love nothing more than lower U.S. interest rates and a weaker U.S. dollar," Stephen Innes of Vanguard Markets said in a commentary.

On Wall Street, technology stocks drove much of the gains, nudging the Nasdaq composite to an all-time high. The benchmark S&P 500 index briefly traded above 3,000 for the first time before pulling back to just below its most recent record high a week ago.

The market climbed early on after the Fed chairman told Congress in his semi-annual report that many Fed officials believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut.

That allayed investors' concerns that unexpectedly strong U.S. jobs data reported Friday might give the Fed reason to stay put on interest rates.

The S&P 500 index rose 0.5 percent to 2,993.07. The index, which set three record highs last week, is now less than 0.1 percent below its all-time high set last Wednesday.

The Dow Jones Industrial Average gained 0.3 percent to 26,860.20, while the Nasdaq climbed 0.7 percent to 8,202.53, a record. Its previous record high was also set last Wednesday.

The Russell 2000 index of smaller company stocks rebounded from a brief slide, gaining 0.2 percent to 1,565.05.

The U.S. stock market rallied through much of June after the Fed first signaled that it might cut rates if necessary to shore up the U.S. economy.

In his prepared statement, Powell said that since Fed officials met last month, "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook." Meanwhile, inflation has fallen farther from the Fed's target.

The Fed's benchmark rate currently stands in a range of 2.25 percent to 2.5 percent after the central bank raised rates four times last year. Many investors have put the odds of a rate cut this month at 100 percent.

A quarter-point cut in interest rates, which many investors expect, isn't likely to have a big impact on consumers' credit cards or mortgage rates. But it would reassure markets that the Fed would be open to further rate cuts if more signs of weakness in the global economy emerge.

Powell is due to appear before the Senate Banking Committee on Thursday. In the meantime, U.S. consumer inflation data are a focus for traders later Thursday.

Investors will have to wait until the end of the month to see what action the Fed takes on interest rates at its next meeting of policymakers.