Asian Stocks Mostly Wilt As Fed Hike Knocks Wall St, US Data Eyed

ASIAN STOCKS TALKING POINTS:

• Stock markets were mostly in the red
• Higher US rates and the prospect of still-more rises made Wall St take fright
• The Dollar got an initial boost, then steadied

Asian stocks were mostly lower on Thursday. Gains were always likely to be tough following the previous session’s Wall Street declines, which came in turn after the Federal Reserve raised interest rates once again and seemed set to continue the process for some time yet.

The Dow Jones Industrial Average lost more than 100 points after Fed Chair Jerome Powell didn’t seem worried about upside inflation pressure, although the prospect of a long trade dispute between the US and China was of course a concern. Sure enough the Nikkei 225 was down 0.6% as its close approached, with all other major bourses lower with the exception of South Korea’s Kospi. It managed to buck the trend and rise.

The US Dollar got an unsurprising initial boost from Fed commentary but steadied through an uneventful Asia Pacific session. The New Zealand Dollar had a modest lift from the Reserve Bank of New Zealand’s monetary policy decision. For sure the RBNZ left the Official Cash Rate alone at its 1.75% record low- as had been widely expected. Still, it said it sees ‘welcome signs’ of a core inflation uptick. Still, it also said that it expects the rate to be steady over the next two years.

NZD/USD remains under clear overall downward pressure, as well it might with the interest rate gap with the US widening. Still, it seems to have settled into a broad range trade over the past month or so, with early September’s lows enduring at the base.

Gold prices inched up as the metal’s fall in the wake of that US rate hike brought out the buyers. Crude oil prices rose with investors looking nervously to the effects of new sanctions against Tehran.

There is a great deal of meat left on Thursday’s economic bones. On the central bank front we’ll hear from European Central Bank President Mario Draghi at a meeting in Frankfurt chaired by Bank of England Governor Mark Carney. As for data, there’s another look at second-quarter US Gross Domestic Product, along with August’s durable goods orders, pending home sales and trade balance. Out of Europe will come German Consumer Price Index data and the ECB’s Economic Bulletin.



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