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Asian markets mixed after Fed minutes, eyes on Powell
HONG KONG, Aug 22, 2019 (BSS/AFP) – Asian markets stuttered Thursday but
dealers remain wary following the release of Federal Reserve minutes that
provided a mixed bag, with a speech by its chair at the end of the week the
key point of focus.
Donald Trump provided some fresh hope for China-US trade talks by saying a
deal will “probably” be made, and Wall Street ended with healthy gains thanks
to blockbuster results from retailers that indicated strong consumer demand.
But investors in Asia were playing it cool ahead of Jerome Powell’s
address to the central bankers’ symposium at Jackson Hole, Wyoming, on Friday
which will be scrutinised for an idea of Fed interest rate policy.
Minutes from the bank’s July meeting — when it cut rates for the first
time since the financial crisis — said policymakers were flexible and
borrowing costs were not on a “preset course” despite trade uncertainty and
weak global growth.
Stephen Innes of Valour Markets said the minutes “painted a convincing
enough picture that the Feds will continue to go along with the market’s
expectations for more cuts, as they will not want to tighten financial
conditions, but at the same time not feel pressured to get ahead of the
curve”.
While the global economy stutters and the China-US trade row rumbles
along, equity markets have found some solace in expectations the Fed will
continue to lower rates.
– Disappointment risk –
But OANDA senior market analyst Jeffrey Halley pointed out that the
minutes showed two governors wanted a 50 basis-point cut, two did not want a
cut at all and the rest settled on 25 basis points, which was eventually
chosen.
“It is hard to see Mr Powell announcing or implying an aggressive new
easing cycle in isolation when just a month ago, the (policy board) was
clearly very split as well,” Halley said.
“The danger is most definitely that Chairman Powell disappoints”.
Tokyo ended 0.1 percent higher, Shanghai edged up 0.1 percent and Sydney
gained 0.3 percent.
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Singapore put on 0.1 percent and Wellington gained 0.2 percent while
Taipei was marginally higher.
But Hong Kong was 0.8 percent lower, while Seoul closed down 0.7 percent,
Manila shed 1.3 percent, Mumbai retreated 0.6 percent and Jakarta lost 0.6
percent.
In early trade, London fell 0.3 percent, while Paris was flat and
Frankfurt rose 0.3 percent.
Crude prices edged up following a recent rally fuelled by trade talks
optimism and hopes for more rate cuts, though Halley warned they could
quickly reverse course.
“Oil would be one of the most vulnerable markets to a Powell
disappointment on Friday, and this should temper and short-term exuberance
over the next 24-hours,” he said.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 20,628.01 (close)
Hong Kong – Hang Seng: DOWN 0.8 percent at 26,048.72 (close)
Shanghai – Composite: UP 0.1 percent at 2,883.44 (close)
London – FTSE 100: DOWN 0.3 percent at 7,184.85
Euro/dollar: UP at $1.1085 from $1.1083 at 2040 GMT
Pound/dollar: UP at $1.2123 from $1.2121
Euro/pound: UP at 91.45 pence from 91.42 pence
Dollar/yen: UP at 106.35 yen from 106.23 yen
West Texas Intermediate: UP 15 cents at $55.83 per barrel
Brent North Sea crude: UP 11 cents at $60.41 per barrel
New York – Dow: UP 0.9 percent at 26,202.73 (close)
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