SHANGHAI, March 21 — Shares in Asia rose today after the US Federal Reserve took a more accommodative stance at its policy meeting, but concerns over slowing global growth and US-China trade talks are expected to limit gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 per cent in early trade. Australian shares were last down 0.1 per cent.
Markets in Japan are closed today for a public holiday.
The rise in the broad Asian index followed a wobbly session on Wall Street overnight, as growth and trade concerns overcame an initial shift toward more risk-taking sparked by the Fed’s dovish shift.
In comments at the end of a two-day policy meeting yesterday, the Fed abandoned projections for any interest rate hikes this year amid signs of an economic slowdown, and said it would halt the steady decline of its balance sheet in September.
But while investors cheered the Fed’s new approach, the reasons behind it sparked concern. Lingering worries about China-US trade talks, which are set to resume next week, also weighed on the investment mood, with US President Donald Trump warning that Washington may leave tariffs on Chinese goods for a “substantial period” to ensure Beijing’s compliance with any trade deal.
“What the Fed is doing is trying to engineer a soft landing. What the market is hearing though is things have gotten so weak so quickly ... and the earnings outlook is so dire that real money managers don’t want to chase this rally,” Greg McKenna, strategist at McKenna Macro wrote in a morning note to clients.
The Dow Jones Industrial Average fell 0.55 per cent to 25,745.67, the S&P 500 lost 0.29 per cent to 2,824.23 and the Nasdaq Composite added less than 0.1 per cent to 7,728.97.
The Fed’s comments pushed yields on benchmark US Treasurys lower, with 10-year notes yielding 2.5245 per cent compared with a US close of 2.537 per cent yesterday.
The abandonment of plans for more rate hikes this year pushed the two-year yield, sensitive to expectations of higher Fed fund rates, to 2.3982 per cent, down from a US close of 2.4 per cent.
After falling yesterday, the dollar steadied, with a basket tracking the currency against major rivals flat at 95.910. It was up a hair against the Japanese currency, buying 110.70 yen.
The euro was up 0.14 per cent on the day at US$1.1427 (RM4.64), while sterling rebounded from a sharp drop yesterday after British Prime Minister Theresa May asked the EU to delay Brexit until June 30, a shorter extension than some in the market had been expecting. May later said she was “not prepared to delay Brexit any further.”
The pound was up 0.11 per cent at US$1.3211.
In commodity markets, oil prices, which had jumped yesterday on supply concerns, retreated.
US crude fell 0.1 per cent to US$60.17 a barrel after touching four-month highs yesterday. Brent crude was a touch lower at US$68.47 per barrel.
Gold gained on the weaker dollar, with spot gold up 0.27 per cent at US$1,315.72 per ounce. — Reuters
