Asia Markets Fail to Find Fed Inspiration -- Update
September 21 2017 - 01:31AM
Dow Jones News
By Kenan Machado
Caution continued in global stock markets following the Federal
Reserve's overnight announcements on the unwinding of its balance
sheet and its intent to stick to its rate-increase schedule.
U.S. stocks finished Wednesday near their prerelease levels, and
most Asian markets on Thursday ultimately moved little from
day-before finishes.
There was some indirect central-bank impact. That was most
apparent in Australia, where the S&P/ASX 200 slid 1.2%, setting
the stage for its worst day in two months, as the utilities
subindex fell 2.5% to 2017 lows. Utilities are a favorite for
investors seeking higher yields, so rising interest rates lessen
their allure--and months of strong economic data have raised the
prospect of Australia's central bank starting its own rate-increase
cycle sooner rather than later.
Also weighing on Australian stocks, but helping those in Japan,
was a jump in the U.S. dollar following the Fed's reiterating its
plan for a third interest-rate increase this year and three more in
2018. The dollar's gains helped push metals prices down some
1%.
"The market wasn't expecting a rate hike in December," said
Shane Chanel, an equities adviser at ASR Wealth Advisers.
Many investors "may have expected a more-dovish outcome" from
the Fed, "especially on the interest-rate projections," added
Steven Friedman, a senior economist at BNP Paribas Asset
Management.
The Nikkei was recently up 0.5%, surrendering some of its
morning gains after the Bank of Japan emerged from its own meeting
and issued a statement in line with expectations. The yen rebounded
a bit after the release, to Yen112.40/dollar from Yen112.60 earlier
Thursday.
Insurers and exporters were strong again. Their shares often
rise when the yen weakens and bond yields go up--as they have since
the start of last week.
Apart from Taiwan, where the stock benchmark rose 0.6% in the
wake of HTC's $1.1 billion smartphone deal with Google, indexes in
Asia were little changed, with slight gains in Hong Kong and India,
small drops in South Korea and Shenzhen. S&P 500 futures are
essentially flat.
Hong Kong bank stocks' gains were muted, as the prospect of
additional interest-rate increases was priced in during their
recent strong rally, said UOB Group stock strategist Ivan Pong.
Despite leaving rates unchanged Wednesday, the U.S. central bank
sounded optimistic about the economy. And there is little apparent
concern about the Fed's plan to start shrinking its $4.5 trillion
balance sheet. It won't dent risk appetite, said Alessio de Longis,
head of macro strategy for international funds at
OppenheimerFunds.
He also doesn't foresee inflationary pressures that could prompt
global central banks to step up hawkish rhetoric and the pace of
tightening.
Oil futures in Asia were little changed after jumping nearly 2%
overnight to hit fresh multimonth highs. Japan Petroleum rose 3%
and Australia's Santos gained 2.2%.
Write to Kenan Machado at kenan.machado@wsj.com
(END) Dow Jones Newswires
September 21, 2017 01:16 ET (05:16 GMT)
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