Thursday 14th June: Asian markets mostly lower as Fed hikes rates by 25 bps

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Thursday 14th June: Asian markets mostly lower as Fed hikes rates by 25 bps 1

Global Markets:

  • Asian Stock Markets : Nikkei down 0.78%, Shanghai Composite down 0.40%, Hang Seng down 1.00%, ASX down 0.09%
  • Commodities : Gold at $1303.10 (+0.14%), Silver at $17.04 (+0.26%), Brent Oil at $76.48 (-0.34%), WTI Oil at $66.58 (-0.09%)
  • Rates : US 10-year yield at 2.946, UK 10-year yield at 1.372, Germany 10-year yield at 0.479

News & Data:

  • (CNY) Industrial Production y/y 6.80% vs 6.90% expected
  • (CNY) Fixed Asset Investment ytd/y 6.10% vs 7.00% expected
  • (AUD) Unemployment Rate 5.40% vs 5.50% expected
  • (AUD) Employment Change 12.0K vs 18.8K expected
  • (USD) Federal Funds Rate <2.00% vs <2.00% expected
  • (USD) Crude Oil Inventories -4.1M vs -1.4M expected
  • (USD) Core PPI m/m 0.30% vs 0.20% expected
  • (USD) PPI m/m 0.50% vs 0.30% expected
  • (GBP) PPI Input m/m 2.80% vs 1.70% expected
  • (GBP) CPI y/y 2.40% vs 2.40% expected
  • (CHF) PPI m/m 0.20% vs 0.30% expected
  • Australian Unemployment Rate Declines as Fewer People Seek Work
  • Hibor hits fresh 10-year high of 1.58 per cent on fears of liquidity crunch
  • China's central bank unexpectedly leaves rates unchanged for reverse repos

Markets Update:

Asian stock markets are mostly lower on Thursday following the weak cues from Wall Street after the U.S. Federal Reserve raised interest rates and stuck a hawkish tone by projecting a faster pace of rate hikes this year. In addition, U.S.-China trade tensions weighed on sentiment. Investors are also cautious ahead of the European Central Bank's monetary policy announcement due later in the day, as the ECB has indicated its meeting will be used to discuss ending its bond purchasing program.

Chinese retail sales and urban investment data were surprisingly weak, pouring cold water on investors’ risk appetite and adding to uncertainty over the world’s second-largest economy after its central bank unexpectedly left interest rates on hold. The Japanese market is declining following the weak cues from Wall Street. In addition, a stronger yen weighed on exporters' shares. The Australian market is edging higher after opening lower. Investor reaction was muted to mixed Australian jobs data for the month of May.

The Fed raised its benchmark overnight lending rate a quarter of a percentage point to a range of 1.75 percent to 2 percent, as expected, on the back of strong U.S. economic growth. Fed policymakers’ rates projections pointed to two additional hikes by the end of this year compared to one previously, based on board members’ median forecast.

In the currency market, the dollar had erased all its post-Fed gains as traders’ focus quickly shifted to the European Central Bank’s policy meeting later in the day. Some emerging market currencies were hit by worries higher U.S. interest rates could prompt investors to shift funds to the United States and also squeeze dollar borrowers in emerging markets. Still, many Asian currencies remained fairly stable so far, thanks to robust growth in the region. Crude oil futures rose Wednesday after the U.S. government said energy inventories fell much more than forecast.

Upcoming Events:

  • 09:30 AM GMT – (GBP) Retail Sales m/m
  • 12:45 PM GMT – (EUR) Main Refinancing Rate
  • 01:30 PM GMT – (CAD) NHPI m/m
  • 01:30 PM GMT – (EUR) ECB Press Conference
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  • 01:30 PM GMT – (USD) Retail Sales m/m
  • 01:30 PM GMT – (USD) Unemployment Claims
  • 11:30 PM GMT – (NZD) Business NZ Manufacturing Index
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