Stocks mixed, yuan highest since July after Fed: Market wrap
SYDNEY: Most currencies advanced against the dollar after the Federal Reserve abandoned projections for a resumption in interest-rate hikes this year and signaled a swift end to its balance-sheet contraction. China’s yuan hit its strongest since July, while stocks were mixed.
Treasuries climbed after the Fed’s stance was more cautious than most had forecast, with 10-year yields dropping to 2.53 percent.
Treasuries climbed after the Fed’s stance was more cautious than most had forecast, with 10-year yields dropping to 2.53 percent.
Most Asian stocks climbed, though Japan is closed for a holiday. South Korean shares outperformed, while they fell in Australia and were little changed in Hong Kong.
New Zealand’s dollar rose as a pick-up in growth eased concern on the need for policy easing. Australia’s dollar gained after a drop in the unemployment rate.
China’s central bank set the daily fixing for the yuan at the highest since July. Earlier, the S&P 500 Index initially rose on the prospect of no-rate-hikes for the foreseeable future, but closed the day lower as financials weighed on the index.
While a yet-more dovish Fed on the surface suggests support for equities, the central bank’s rapid about-face on monetary tightening left some observers concerned that policy makers see a darker outlook for the economy.
The median estimate of economists had been for the Fed’s dot-plot projections to leave one hike penciled in for 2019. The Fed also decided to slow its draw-down of bond holdings starting in May, then end it in September.
“The change in the dot plot to zero is significant, for sure,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management.
“That’s a pretty big change because they’ve turned pretty dovish since the beginning of the year and they’re turning even more dovish now.”
Treasury yields had already dropped amid increased worries about the global expansion in recent weeks, then plumbed the lowest levels in more than a year on Wednesday. Traders are betting there’s a 50-50 chance of a U.S. rate cut this year, futures trading shows.
Treasuries will start trading when London opens because of the Japan holiday.
Also weighing on equity investor sentiment: President Donald Trump’s latest remarks on trade. He said Wednesday that tariffs on Chinese goods will remain in place until the nation complies with a trade deal that has yet to be sealed. The news weakened industrial stocks in the U.S.
In Hong Kong, the de facto central bank again bought the local dollar after the city’s exchange rate fell to the weak end of its trading band against the greenback.
The Hong Kong Monetary Authority bought HK$3.54 billion ($451 million) of local currency early Thursday.
Elsewhere, the pound pared a decline brought on as pressure built on Theresa May to gather a majority for her Brexit deal. The U.K. prime minister asked the European Union for a three-month extension to the March 29 deadline in a move that increases the risks of a no-deal departure.
Here are some key events coming up this week:
Company earnings this week include Tencent, Tiffany, Nike and PetroChina.
Central banks in the U.K., the Philippines and Indonesia are all scheduled for policy meetings.
Euro-zone purchasing manager survey numbers on Friday will give an indication of the health of the region’s industrial and service sectors.
And these are the main moves in markets:
Stocks
• Hong Kong’s Hang Seng Index rose 0.1 percent as of 11:21 a.m. local time.
• Australia’s S&P/ASX 200 Index fell 0.5.
• South Korea’s Kospi index rose 0.6 percent.
• Shanghai Composite Index gained 0.3 percent.
• The S&P 500 Index fell 0.3 percent. Futures rose 0.1 percent.
Currencies
• The yen advanced 0.2 percent to 110.51 per dollar.
• The offshore yuan rose 0.1 percent to 6.6838 per dollar.
• The Bloomberg Dollar Spot Index was flat after falling 0.5 percent to a six-week low Wednesday.
• The euro traded at $1.1426.
• The British pound was at $1.3215.
Bonds
• The yield on 10-year Treasuries decreased eight basis points Wednesday, to 2.53 percent, a 14-month low.
• Australia’s 10-year bond yield fell to 1.90 percent.
Commodities
• West Texas Intermediate crude dipped 0.2 percent to $60.14 a barrel, near a four-month high.
• Gold rose 0.4 percent to $1,317.88 an ounce. - Bloomberg
New Zealand’s dollar rose as a pick-up in growth eased concern on the need for policy easing. Australia’s dollar gained after a drop in the unemployment rate.
China’s central bank set the daily fixing for the yuan at the highest since July. Earlier, the S&P 500 Index initially rose on the prospect of no-rate-hikes for the foreseeable future, but closed the day lower as financials weighed on the index.
While a yet-more dovish Fed on the surface suggests support for equities, the central bank’s rapid about-face on monetary tightening left some observers concerned that policy makers see a darker outlook for the economy.
The median estimate of economists had been for the Fed’s dot-plot projections to leave one hike penciled in for 2019. The Fed also decided to slow its draw-down of bond holdings starting in May, then end it in September.
“The change in the dot plot to zero is significant, for sure,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management.
“That’s a pretty big change because they’ve turned pretty dovish since the beginning of the year and they’re turning even more dovish now.”
Treasury yields had already dropped amid increased worries about the global expansion in recent weeks, then plumbed the lowest levels in more than a year on Wednesday. Traders are betting there’s a 50-50 chance of a U.S. rate cut this year, futures trading shows.
Treasuries will start trading when London opens because of the Japan holiday.
Also weighing on equity investor sentiment: President Donald Trump’s latest remarks on trade. He said Wednesday that tariffs on Chinese goods will remain in place until the nation complies with a trade deal that has yet to be sealed. The news weakened industrial stocks in the U.S.
In Hong Kong, the de facto central bank again bought the local dollar after the city’s exchange rate fell to the weak end of its trading band against the greenback.
The Hong Kong Monetary Authority bought HK$3.54 billion ($451 million) of local currency early Thursday.
Elsewhere, the pound pared a decline brought on as pressure built on Theresa May to gather a majority for her Brexit deal. The U.K. prime minister asked the European Union for a three-month extension to the March 29 deadline in a move that increases the risks of a no-deal departure.
Here are some key events coming up this week:
Company earnings this week include Tencent, Tiffany, Nike and PetroChina.
Central banks in the U.K., the Philippines and Indonesia are all scheduled for policy meetings.
Euro-zone purchasing manager survey numbers on Friday will give an indication of the health of the region’s industrial and service sectors.
And these are the main moves in markets:
Stocks
• Hong Kong’s Hang Seng Index rose 0.1 percent as of 11:21 a.m. local time.
• Australia’s S&P/ASX 200 Index fell 0.5.
• South Korea’s Kospi index rose 0.6 percent.
• Shanghai Composite Index gained 0.3 percent.
• The S&P 500 Index fell 0.3 percent. Futures rose 0.1 percent.
Currencies
• The yen advanced 0.2 percent to 110.51 per dollar.
• The offshore yuan rose 0.1 percent to 6.6838 per dollar.
• The Bloomberg Dollar Spot Index was flat after falling 0.5 percent to a six-week low Wednesday.
• The euro traded at $1.1426.
• The British pound was at $1.3215.
Bonds
• The yield on 10-year Treasuries decreased eight basis points Wednesday, to 2.53 percent, a 14-month low.
• Australia’s 10-year bond yield fell to 1.90 percent.
Commodities
• West Texas Intermediate crude dipped 0.2 percent to $60.14 a barrel, near a four-month high.
• Gold rose 0.4 percent to $1,317.88 an ounce. - Bloomberg
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