Thursday 19th September: Asian markets mostly higher as Fed slashes rates

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Global Markets:

  • Asian Stock Markets : Nikkei up 0.38%, Shanghai Composite up 0.20%, Hang Seng down 1.30%, ASX up 0.54%
  • Commodities : Gold at $1502.95 (-0.85%), Silver at $17.78 (-0.76%), Brent Oil at $63.88 (+0.44%), WTI Oil at $58.30 (+0.45%)
  • Rates : US 10-year yield at 1.786, UK 10-year yield at 0.633, Germany 10-year yield at -0.494

News & Data:

  • (GBP) CPI y/y 1.70% vs 1.80% expected
  • (GBP) PPI Input m/m -0.10% vs -0.40% expected
  • (CAD) CPI m/m -0.10% vs -0.20% expected
  • (CAD) Common CPI y/y 1.80% vs 1.90% expected
  • (CAD) Median CPI y/y 2.10% vs 2.10% expected
  • (CAD) Trimmed CPI y/y 2.10% vs 2.10% expected
  • (USD) Building Permits 1.42M vs 1.31M expected
  • (USD) Crude Oil Inventories 1.1M vs -2.1M expected
  • (USD) Federal Funds Rate <2.00% vs <2.00% expected
  • (NZD) GDP q/q 0.50% vs 0.40% expected
  • (AUD) Employment Change 34.7K vs 15.2K expected
  • (AUD) Unemployment Rate 5.30% vs 5.20% expected
  • BoJ Governor Kuroda Says Japan’S Economy Is Expanding Moderately As Trend
  • Divided FOMC to Boost Gold as Hedging Tool Against Fiat Currencies

Markets Update:

Asian stock markets are mostly higher on Thursday after the U.S. Federal Reserve announced its widely expected decision to cut interest rates for the second time this year, but offered mixed signals about the outlook for interest rates.

The yen rose from a seven-week low versus the dollar and held onto those gains after the Bank of Japan kept policy on hold, as expected, but signalled it could ease next month.

In Japan, the Nikkei 225 rose 0.4% while the Topix index added 0.6%. Over in South Korea, the Kospi gained 0.5% as shares of Samsung Electronics surged 2.2%. Mainland Chinese stocks were mainly up by the afternoon, with the Shenzhen component rising 0.4% and Shenzhen composite adding 0.6%. Hong Kong’s Hang Seng index, however, fell 1.3% as shares of life insurer AIA dropped 2.98%. Australia’s S&P/ASX 200 also rose 0.5%.

The Fed cut interest rates for a second time this year to 1.75%-2.00% in a 7-3 vote but signalled further cuts are unlikely as the labour market remains strong. The rate cut was widely expected, but the split vote has raised some concern about predicting the future path of monetary policy. So-called dot-plot forecasts from all 17 policymakers showed even broader disagreement, with seven expecting a third rate cut this year, five seeing the current rate cut as the last for 2019, and five who appeared to have been against even Wednesday’s move.

U.S. crude futures rose 0.24% to $58.30 per barrel. Oil markets have stabilised after attacks in Saudi Arabia over the weekend triggered a supply shock and sent prices soaring, but the volatility is still a risk as Middle East tensions remain high.

Upcoming Events:

  • 07:30 AM GMT – (CHF) SNB Monetary Policy Assessment
  • 07:30 AM GMT – (CHF) SNB Policy Rate
  • 08:30 AM GMT – (GBP) Retail Sales m/m
  • 11:00 AM GMT – (GBP) MPC Official Bank Rate Votes
  • 11:00 AM GMT – (GBP) Monetary Policy Summary
  • 11:00 AM GMT – (GBP) Official Bank Rate
  • 11:00 AM GMT – (GBP) Asset Purchase Facility
  • 11:00 AM GMT – (GBP) MPC Asset Purchase Facility Votes
  • 12:30 PM GMT – (USD) Philly Fed Manufacturing Index
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