(Yicai Global) July 28 -- Global stock markets rallied after the US Federal Reserve chairman hinted yesterday that the pace of interest rate hikes would be slowed. According to analysts, his statement will also have a positive impact on the Chinese mainland market, with A-shares expected to climb further.

Investors may start to anticipate the end of the rate hike cycle after the comments by Fed Chairman Jerome Powel, triggering market optimism, Xu Changtai, chief strategist for Asia Pacific markets at J.P. Morgan Asset Management, told Yicai Global.

“We expect this to be positive for Asian assets as well, given that risk appetite is likely to improve in the near term,” Xu said.

The Fed raised its target range for the federal funds rate by 75 basis points yesterday, in line with market expectations. Powell revealed in a briefing that the pace of rate hikes may be slowed at some point. After his ‘dovish’ statement, the three major US stock indexes rallied sharply, with the Nasdaq climbing 4 percent.

Spurred by overseas markets, China followed suit in early trading today, but cooled after midday. At the day’s close, the Shanghai Composite Index was up 0.2 percent at 3,282.58, the Shenzhen Component Index had added 0.2 percent to 12,428.72, and the ChiNext Index had slipped 0.3 percent to 2,705.90.

A-shares, or stocks those traded on mainland markets, are largely immune to the external risk of interest rate hikes, according to Li Dehui, a senior fund manager at China International Fund Management.

China has moderate inflation and there is no need for the central bank to hike rates, Li noted, adding that increases in the cost of borrowing overseas may also be in the final stages and liquidity constraints may shrink.

Chinese markets rallied in May and June as liquidity became more plentiful during the initial period of economic stimulus. Though A-share indexes have fallen back this month, the market still anticipates an upswing, Li said.

Recent economic data indicated that China's economy hit the bottom in April, since when consumption, industrial production and fixed asset investment have gradually been returning to normal. With fiscal policy support, the economy will be relatively healthy in this half of the year, Xu said.

Editors: Dou Shicong, Tom Litting