JW: Asian stocks move higher after signs of U.S. rate hike
Minutes from the Federal Reserve’s October meeting – which took place before last month’s bumper nonfarm payrolls report – revealed that most members of the policy-setting committee expected economic conditions to be right for a December rate hike.
Britain’s FTSE 100 advanced 0.9 percent to 6,335.07 and France’s CAC 40 rose 0.9 percent to 4,949.32.
Among emerging currencies the Australian dollar rose 0.79 percent against the greenback, while South Korea’s won gained 0.80 percent and the Malaysian ringgit added 1.26 percent.
SYDNEY, Nov 19 Asian shares jumped on Thursday and the dollar backed off highs on expectations the Federal Reserve would be confident enough of the US economy to raise rates in December but would then proceed with great caution on further tightening.
European stocks also opened strongly with the FTSEurofirst 300 pushed to a three-month high by more than 1 per cent gains in London, Frankfurt and Paris, after Japan’s Nikkei had hit a similar peak in Asia.
The Bank of Japan surprised no one at its regular policy meeting by maintaining the current pace of asset buying, though many still suspect it will have to ease again at a few point to force inflation higher.
Ultralow interest rates have boosted stocks over the past several years, but uncertainty over the timing of a first US rate rise in nearly a decade has at times weighed on markets in recent months.
Rob Kaplan, the Fed’s newest policymaker, declined to use his first public appearance as president of the Dallas Fed to comment directly on the timing of a rate hike, but expressed confidence that inflation will rise back to the Fed’s goal over the medium term.
While two-year yields rose three basis points, those on 30-year paper actually dipped a basis point.
“We think only about 60 percent of the Fed hike is priced in, so there is clearly scope for the dollar to go higher if that pricing moves to 80-90 percent”, Barclays strategist Nick Sgouropoulos said.
However, being long dollars has been a very crowded trade and investors made a decision to book a few profits in the wake of the Fed minutes.
“I believe it will soon be appropriate to begin a new policy phase”, he said, adding he will monitor economic data between now and a meeting on December 15-16, for which he has a vote on policy.
CURRENCIES: The dollar slipped to 123.23 yen from Wednesday’s 123.50 yen. Zinc, copper, lead and nickel were all near their lowest in five to seven years. USA crude gained 24c to $40.99 a barrel, while Brent firmed 37c to $44.51.
