Asian markets rallied on Thursday and the dollar continued to weaken after minutes from the Federal Reserve’s latest monetary policy meeting suggested it could slow the pace of rate hikes.

The news offered traders a cushion against concerns about rising Covid cases in China, which have fueled speculation authorities that they will return to lockdowns and other economically debilitating measures to combat the outbreak.

Wednesday’s much-anticipated minutes showed that most Federal Reserve governors believed smaller hikes were “probably appropriate soon” as the economy shows signs of weakness after nearly a year of monetary tightening.

Betting mounted that officials announced a 50 basis point hike at their December meeting after rising 75 points four times in a row, with officials keeping an eye on economic data.

The latest indicators showed that the manufacturing and service sectors continued to contract over the past month while jobless claims rose.

The developments allowed Wall Street traders to spring into their Thanksgiving break, the S&P 500 ended at a two-month high as they finally see a glimmer of light at the end of the tunnel after a painful year.

And Asia followed, with Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta all in the red.

The more risk-on environment was also reflected in the dollar’s further decline against its peers after rising sharply for most of the year as traders bet on ever-higher US interest rates.

“Equities are reveling in the … minutes after the Fed telegraphed a downgrade from jumbo to extra-large rate hikes,” said Stephen Innes of SPI Asset Management.

“A commitment to move towards tightening monetary policy remains intact, but the (Political Council) stands ready to slow down the path towards that goal.”

He added that a less aggressive Fed “should smooth the runway for an Asian launch, fueled by expectations of China reopening by March next year.”

Investors are watching China closely after it announced a record number of new Covid cases on Thursday, as authorities worked to stem the spread with lockdowns, mass testing and travel restrictions.

As officials attempt more targeted measures to contain the disease, concerns remain that they will resort to the painful citywide shutdowns seen in Shanghai earlier this year as part of the country’s zero-Covid strategy, which is hurting the economy have drawn.

However, concerns were eased somewhat after China signaled fresh support measures to boost growth, with the State Council saying tools would be used to ensure liquidity in markets.

The comments sparked talks of further cutting the amount of cash banks are required to hold in reserve so they can lend more.

Tokyo – Nikkei 225: up 1.2 percent at 28,448.58 (breakthrough)

Hong Kong – Hang Seng Index: up 0.5 percent to 17,617.28

Shanghai — Composite: up 0.3 percent to 3,106.13

Euro/dollar: rise to $1.0424 from $1.0401 on Wednesday

Dollar/Yen: DOWN at 138.82 yen from 139.52 yen

Pound/dollar: rise to $1.2088 from $1.2064

Euro/pound: up to 86.23p from 86.18p

West Texas Intermediate: FALSE, up 0.2 percent at $77.77 a barrel

North Sea Brent Crude: FALSE, up 0.3 percent at $85.14 a barrel

New York – Dow: up 0.3 percent at 34,194.06 (close)

London – FTSE 100: up 0.2 percent at 7,465.24 (close)