Asian Markets Lifted by Fed Decision to Maintain Status Quo
September 21 2016 - 11:20PM
Dow Jones News
Asian stocks shot higher across the board Thursday, buoyed by
the U.S. Federal Reserve's decision to stick to the status quo, as
well as rising commodity prices.
The Hang Seng Index in Hong Kong and Korea's Kospi were both up
1%, while the S&P/ASX 200 rose 0.8% and the Shanghai Composite
Index was up 0.7%. Japan was closed for a public holiday.
Overnight, the Federal Reserve opted to hold its key short-term
interest rate steady. Asia-based traders welcomed the news as a
rate rise would have pulled money out of emerging markets.
Fed officials also cut their 2016 growth forecast for the U.S.
economy to 1.8%, from a 2.0% projection in June, and lowered their
long-term view on the growth rate to 1.8% from 2%.
Some in the market were caught off-guard by the strength of the
relief rally.
"It took me a bit by surprise," said Daniel So, a strategist
China Merchants Bank International Ltd. "Of course it is good news
for the financial markets in the short term, but the market has
expected this and the interest rate risk hasn't gone away."
The Fed's move followed the Bank of Japan's announcement
Wednesday that it left unchanged its negative interest rate on
certain commercial-bank deposits and said it would introduce a
10-year interest-rate target.
Despite the dissent of three more hawkish Federal Open Market
Committee members, the consensus around a rate increase before the
end of the year appears solid. According to Chicago Mercantile
Exchange's FedWatch tool, there is a 59.3% chance of a change in
interest rates at the December meeting, a touch higher than the
previous day's probability.
Elsewhere, oil and metals prices rose strongly on the back of a
softer dollar, with the global Brent crude benchmark gaining $0.50
to trade at $47.32 a barrel, while copper and aluminum rose 0.5%
and 0.4%, respectively. The move higher supported related stocks.
In Australia, BHP Billiton jumped 2.7% and Rio Tinto surged
2.8%.
Write to Ese Erheriene at ese.erheriene@wsj.com
(END) Dow Jones Newswires
September 21, 2016 23:05 ET (03:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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