Stocks Swing as Fed Sticks at Three; Dollar Steady: Markets Wrap

Publikuota: 2018-03-22
Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Market Committee meetings in Washington, U.S., March 21, 2018. REUTERS/Aaron P. Bernstein
Federal Reserve Chairman Jerome Powell speaks at a news conference following the Federal Open Market Committee meetings in Washington, U.S., March 21, 2018. REUTERS/Aaron P. Bernstein
 

The dollar maintained losses, Treasuries rose and Asian stocks fluctuated as traders assessed the implications of higher borrowing costs in the U.S. and China alongside global trade tensions, with President Donald Trump set to announce tariffs against Asia’s largest economy on Thursday.

Japanese stocks rose as the yen came off the day’s highs. Korea pared early gains while Hong Kong and Chinese shares fell after China’s central bank also lifted market interest rates. The greenback remained under pressure as the Fed didn’t suggest that it was leaning toward four rate hikes this year, as some had expected. The yen was the strongest of the Group-of-10 currencies and the ringgit led gains in Asia’s emerging-market currencies. The U.S. 10-year yield slid while yields on two-year U.S. Treasuries, which are more sensitive to changes in Fed policy than longer debt, extended its decline.

Federal Reserve officials, meeting for the first time under Chairman Jerome Powell, raised the benchmark lending rate a quarter point and forecast a steeper path of hikes in 2019 and 2020, citing an improving economic outlook. Investor focus now switches to trade, with Trump set to announce about $50 billion of tariffs against China over intellectual-property violations on Thursday, according a person familiar with the matter.

“Generally speaking the meeting was slightly dovish compared to what most market participants were expecting,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “A rate hike was certain, but lack of upward movement in the 2018 ‘dots’ left investors who were looking for a hawkish outcome unsatisfied.”

Elsewhere, oil held gains after inventories in the U.S. dropped for the first time in a month, catching traders off guard. The Australian dollar slipped after the unemployment rate climbed. The kiwi dollar edged higher after the New Zealand central bank held interest rates at a record low and indicated it doesn’t expect to raise them anytime soon.

Here are some key events on the schedule for the remainder of this week:

The Bank of England is expected to keep interest rates and its asset-purchase program unchanged on Thursday. Attention will be on language and the odds for a May hike, now seen as increasingly likely. Philippines monetary policy decision is due Thursday. Euro area flash PMIs come Thursday as well as Germany’s IFO gauge of business confidence.

And these are the main moves in markets: Stocks

The MSCI Asia Pacific Index jumped 0.4 percent as of 3:15 p.m. Tokyo time. Topix index climbed 0.7 percent. Hong Kong’s Hang Seng Index lost 0.3 percent. Kospi index jumped 0.4 percent. Australia’s S&P/ASX 200 Index fell 0.2 percent. Futures on the S&P 500 Index added 0.1 percent.

Currencies

The Bloomberg Dollar Spot Index rose less than 0.05 percent. The Japanese yen rose 0.1 percent to 105.90 per dollar. The euro rose 0.1 percent to $1.2346. The Australian dollar fell 0.3 percent to 77.46 U.S. cents.

Bonds

The yield on 10-year Treasuries declined one basis points to 2.87 percent. Japan’s 10-year yield fell one basis point to 0.038 percent. Australia’s 10-year yield was steady at 2.70 percent.

Commodities

West Texas Intermediate crude rose 0.1 percent to $65.25 a barrel. Gold fell 0.2 percent to $1,329.18 an ounce. LME copper rose 0.5 percent to $6,828.00 per metric ton.

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