Talking Points:
- Asian shares were mostly higher as investors mulled the US Federal Reserve’s interest rate hike
- That wasn’t the only monetary decision to hand. Japan left rates alone, China made modest increases
- Local data were mixed; the Australian labor market underwhelmed
Asian shares were broadly higher into the close, if not by much, after a nervy session marked by various monetary-policy decisions.
The Federal Reserve opted to raise US rates, as expected. However, it stuck to its expectation of two more quarter-point rises this year, disappointing US Dollar bulls who had hoped for more. The greenback duly fell back, giving Asian bourses their customary lift as export-linked stocks gained.
The Bank of Japan meanwhile held all its policy settings steady, as had been universally expected. However, the People’s Bank of China raised its short-term interest rate by 0.1 percentage points. This was the third hike in three months and is possibly aimed at heading off prospects of capital flight as US rates rise.
Stocks also had a mighty Wall Street tailwind to chivvy them along. Sure enough most managed gains. The Nikkei’s were very marginal and it ended near flat, up 0.03%. Australia’s ASX rose up 0.2%, its going made a little heavier by a miserable set of local labor data. Job creation faltered and the unemployment rate inched up, unexpectedly.
Chinese mainland stocks and their Hong Kong counterparts were all higher, as was Seoul’s Kospi. The US Dollar index which tracks the currency against a range of major currencies slipped, supposedly on disappointment that the Fed wasn’t more hawkish. It slipped back below the 101 point to trade in the high 100.50s.
Crude oil prices climbed quite sharply in the wake of a drawdown in US inventories. These have been quite rare in recent weeks. The International Energy Agency reportedly suggested that output cuts from major producers could lead to a crude deficit in the first half of next year.
Gold prices moved up to their highs for the week as the US Dollar slipped, but has since pared those gains. It was at $1226.00/ounce at 0600 GMT.
Fed mulling is likely to dominate the rest of the global session but there are plentiful points of economic interest. We’ll get the Bank of England’s policy decision, and the Swiss National Bank’s. Eurozone consumer price data is also due. From the US will come housing-start data, the Job Openings and Labor Turnover (JOLTS) survey, along with initial and continuing jobless-claim numbers.
In the Netherlands, it looks as though the incumbent government has fended off a challenge from a more eurosceptic and populist party.
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
