Asia shares set to follow Wall Street's modest gains after Fed maintains stance

An investor looks at a board displaying stock prices at the Australian Securities Exchange (ASX) in Sydney. — Reuters file pic
An investor looks at a board displaying stock prices at the Australian Securities Exchange (ASX) in Sydney. — Reuters file pic

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NEW YORK, April 8 ― Asian equities are poised to track Wall Street's cautious gains today after minutes from the Federal Reserve's latest meeting reiterated its commitment to keep interest rates low until the US economy makes a more secure recovery.

The S&P 500 and Dow closed slightly higher yesterday, as the Fed's commentary reinforced investor expectations that the central bank plans to maintain its policy support despite massive fiscal spending from the recent government stimulus package.

“Investors remain intensely focused on interest rates,” said Jeff Buchbinder, equity strategist at LPL Financial in Boston. “We in the market didn't expect any signals of a change in policy and that's what we got.”

Australian S&P/ASX 200 futures rose 0.52 per cent in early trading, while Japan's Nikkei 225 futures added 0.03 per cent.

US Federal Reserve officials expressed caution about ongoing risks of the pandemic and reaffirmed their commitment to bolstering the economy given “that the path ahead remained highly uncertain,” the minutes from the March 16-17 meeting said.

The yield on the benchmark 10-year US Treasury note moved higher late in the session, yet remained below a 14-month high of 1.776 per cent hit on March 30. The recent pullback in yields has helped growth names and lifted technology and communication services stocks as the best performing sectors on the day.

“The 10-year yield didn't move much today and the rate seems to be settling in to a little bit lower range that really coincides with the better performance for the growth stocks, particularly tech,” Buchbinder said.

On Wall Street, the Dow Jones Industrial Average rose 0.05 per cent to 33,446.26, the S&P 500 gained 0.15 per cent to 4,079.95 and the Nasdaq Composite dropped 0.07 per cent to 13,688.84.

Following the release of the Fed minutes, the benchmark 10-year notes last fell 4/32 in price to yield 1.6686 per cent, down from 1.656 per cent late on Tuesday.

“We've already seen long-term 10-year rates jump up and with the Fed telling us they are not going to move so interest rates could stay at the lows that they are until maybe 2022 when they step in,” said Jeff Carbone, managing partner at Cornerstone Wealth Group in Charlotte. The US dollar advanced against a basket of world currencies after oscillating for much of the session, rising in the wake of the Fed minutes release.

The dollar index rose 0.148 per cent, with the euro down 0.02 per cent to US$1.1868 (RM4.92). The Japanese yen was flat versus the greenback at 109.85 per dollar, while the Korean won strengthened 0.03 per cent versus the greenback at 1,118.71 per dollar.

Gold prices dipped as economic optimism drew investors away from the safe-haven metal in favor of riskier assets.

Spot gold dropped 0.4 per cent to US$1,737.11 an ounce. US gold futures settled 0.1 per cent lower at US$1,741.6.

Crude oil prices rose on an improving global economic outlook, but were held in check by rising gasoline inventories.

US crude settled at US$59.77 per barrel, up 0.74 per cent, while Brent gained 0.67 per cent to settle at US$63.16 per barrel. ― Reuters

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