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Asian Stocks Mostly Lower As Investors Digest Fed Hike

Asian Stocks Mostly Lower As Investors Digest Fed Hike

David Cottle, Analyst


Talking Points

  • Most Asian markets slipped as investors wondered how much further US interest rates might rise
  • The Fed raised them as expected Wednesday and said it expects to do so again
  • A report that President Donald Trump was under personal investigation for potential obstruction of justice heightened market nerves

See what the trading community makes of the currencies you like, and those you loathe, at the DailyFX sentiment page.

Asian stock markets were mostly lower Thursday, with caution prevailing as the US Federal Reserve raised interest rates in the session before.

A rise was widely anticipated. However, the US central bank said that it expected to make one more quarter-percentage-point rise this year, even though inflation is currently below its target. In short investors are unsure whether future rises will be forthcoming, and if so how many of them there might be. Market tensions were also increased by a report from the Washington Post. Citing official sources the paper said that President Donald Trump was now personally under investigation for obstruction of justice. Previous investigations had been aimed at his electoral campaign more broadly.

The Nikkei 225 slipped by 0.3%, with the ASX 200, Kospi and Hang Seng all down. Mainland Chinese stocks bucked the trend, with a very modest rise for the Shanghai Composite visible in the afternoon session.

The People’s Bank of China left its interest rates alone on Thursday.

The US Dollar was a little weaker generally. The Australian Dollar got a big boost from a blockbuster set of official employment data from its home country. A net 42,000 jobs were created in May, making mockery of the 10,000 expected. Full-time employment also expanded hugely, rebounding from the previous month’s worrying collapse.The New Zealand Dollar meanwhile was knocked by underwhelming official growth data.

News of the investigation into President Trump saw gold prices gain, and hold those gains through the Asian session. Crude oil prices were beset by the now-familiar combination of high global inventories and doubts about the ability of traditional producers to implement meaningful production cuts. Leading benchmarks lost about ten cents/barrel.

There’s plenty left on the economic data schedule for investors to get their teeth into. UK retail sales data are coming up, as is the June interest rate decision from the Bank of England. Rates are expected to be left alone despite rising inflation.US initial jobless claims numbers are also due, as is the National Association of Home Builders’ house price index.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.