Following gains on Wall Street, Asian shares were mostly higher on Thursday
The Federal Reserve signaled it’s almost ready to taper its bond-buying program (in November) if the economy continues to make further progress. The central bank also said it might even move up its timetable for raising interest rates to 2022, the dot plot suggested. Previously the Fed had indicated the first rate hike would come until 2023. The tapering program will be gradual and could end “around the middle of next year”, Powell said.
As the Fed’s policy update was broadly in line with market expectations, Wall Street stocks finished higher overnight. The S&P 500 rose 0.95% following four days of losses. The Dow Jones climbed 1% as well as the Nasdaq Composite. The yield on the 10-year Treasury note was holding steady at 1.31% following the Fed’s decision.
Following gains on Wall Street, Asian shares were mostly higher on Thursday after the Fed confirmed it will likely begin slowing the pace of its monthly bond purchases soon. Meanwhile, Evergrande said it will pay the interest due today to bondholders in China. Against this backdrop, the Shanghai Composite index in China gained 0.24%, Hong Kong’s Hang Seng advanced 0.76%, Australia’s S&P/ASX 200 added 1.18% while South Korea’s Kospi shed 0.47%. Markets were closed in Tokyo.
In currencies, the dollar finished higher on Wednesday following the outcome of the Federal Reserve meeting. However, the greenback came under pressure today, falling in tandem with the Treasury yields. Following recent encouraging comments on inflation by the ECB officials, EUR/USD bounced back above 1.1700 but failed to extend the recovery, being capped by the 1.1725 region early in Europe.
Meanwhile, oil prices have been surging for the third day in a row on Thursday. Brent crude extended gains to the $76.50 area last seen in mid-July. The Energy Information Administration reported on Wednesday that U.S. crude inventories fell by 3.5 million barrels last week. The agency had reported crude supply declines in each of the previous six weeks. A weaker dollar helped push the prices further higher early on Thursday.