Gold and APAC Stocks Juiced By Fed's Williams, Whatever He Meant
APAC Stocks Talking Points:
- NY Federal Reserve President John Williams sent stocks higher with comments that seemed to suggest lower rates could come soon
- The NY Fed has reportedly attempted to temper the remarks, but stocks stayed up anyway
- Australia’s gold miners did especially well
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Gold stocks led the ASX 200 higher on Friday, with Asian markets more broadly gaining on renewed hopes for markedly lower interest rates in the United States. Lower interest rates of course mean lower bond yields. They in turn burnish the relative appeal of non-yielding chunks of precious metal.
Most of this green on the screens seems to have been down to New York Federal Reserve President and Federal Open Market Committee Vice Chair John Williams. He said on Thursday than central bankers need to ‘act quickly’ as economic growth slows. Asian markets have interpreted this as a comment that lower rates are coming soon, perhaps as soon as the end of this month.
CNBC has since reported that spokesman for the New York Fed has attempted to dial things back a bit, and that Williams was speaking in general historical terms rather than forecasting. Asian mainboards have remained up nonetheless.
The ASX 200 was up 0.7% as its close loomed, with Minters like Northern Start Resources and Evolution up by more than 5% on the day. The Nikkei 225 added 1.7%. There chipmakers were doing well, not thanks to Mr. Williams but rather basking in the reflected glory of Taiwanese peer TSMC. Its positive revenue outlook pleased the crowds.
Mainboards in Shanghai and Hong Kong were up by 1% apiece.
The US Dollar was predictably weaker as markets wondered about near-term rate cuts. Against a basket of its most widely traded rivals the Greenback is sitting close to two-week lows, although it bounced somewhat through the Asian session.
Gold prices have been underpinned for some time by the prognosis that global rates are headed lower again (to the limited extent that they ever rose from their post-crisis lows). The near-certainty that the US will soon join in has taken the metal up to highs not seen since mid-2013.
The oldest haven’s price has been in a clear uptrend since the lows of late 2015, fundamentally underpinned by weak global inflation. It doesn’t look as though that underpinning faces any serious near-term threat.
The remainder of the global session is not replete with likely points of investor interest but there are a few. Canadian retail sales data are coming up, as is the University of Michigan’s venerable consumer sentiment snapshot. St. Louis Fed President James Bullard will speak in New York.
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--- Written by David Cottle, DailyFX Research
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