Markets shrug off rising tensions between the US and China
During yesterday’s meeting, the Federal Reserve pushed back against the market’s pricing of premature rate hikes, as the central bank’s latest projections showed that the policymakers don’t anticipate an increase in interest rates at least until 2023. As such, a dovish Fed rate decision helped send the S&P 500 and Dow Jones Industrial Average stock indices to record highs. The former ended the session up 0.3% and the latter up 0.6%, while the Nasdaq 100 ended the session up 0.4%. Furthermore, Fed’s new economic projection featured big upgrades to the growth forecasts in the reflection of the positive impact of stimulus.
Today in Asia, stocks were higher after the Fed committed to maintaining the accommodative monetary policy. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.87%, while stocks in China rose 0.74%. Australia’s market bucked the trend and fell 0.73%. Of note, regional investors shrugged off the news from the geopolitical front. Ahead of a high-level summit coming up today between the US and China, the US Sec State Blinken said China aggression poses a challenge. Earlier, China said the country will not compromise with the US over sovereignty.
European stocks opened higher to start the day, as investors continue to cheer the outcome of the Fed’s meeting. Later today, the Bank of England’s Monetary Policy Committee will announce its own policy decision. The central bank is expected to keep its key rate steady at 0.1% and maintain the ceiling of its continuing bond-buying program at £895 billion.
Meanwhile, the dollar regains ground following a widespread but short-lived sell-off seen in the aftermath of the Federal Reserve meeting on Wednesday. EURUSD failed to regain the 1.2000 figure and turned negative on the day in recent trading despite the ECB’s Lagarde said that risks surrounding the Eurozone growth outlook have become more balanced. USDJPY reversed early losses, to climb back to multi-week highs in the 109.30 area, suggesting the pair could extend the ascent despite the overbought conditions.