The Federal Reserve is keeping its key short term interest rate at a record low in light of the weak global economy and dismal economic reports coming out of the U.S. economy which includes slower USA hiring and subpar inflation.
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India’s BSE declined by 0.64% at 26,865.41, while Australia’s S&P/ASX 200 was trading at 5,266.90 down 1.28% and South Korea’s KOSPI was trading lower by 0.41% at 2,034.16. It had ended down 0.55 per cent on Thursday.
WALL STREET: After yo-yoing during the day, the Dow Jones industrial average gained 198.09 points, or 1.1 percent, to 17,779.52.
Craigs Investment Partners broker Chris Timms said the USA stock markets ended higher after the Fed left its monetary policy unchanged but signalled a rate increase was on the table for its next meeting in December. The hawkish Fed statement raised the probability of a rate hike in December to 50 percent, up from 30 percent before the statement, according to the Fed Funds futures contract.
The Fed cut its benchmark rate to near zero during the Great Recession to encourage borrowing and spending to boost a weak economy.
At a few point, the Fed will have to raise the rates after years of near zero interest rates.
The yen attracted purchases as the unexpectedly strong economic indicator helped diminish expectations for the Bank of Japan’s additional monetary easing steps. The Bank of Japan holds a policy meeting on Friday.
The Fed, however, downplayed recent global financial market turmoil and said the slower pace of growth in the labour market hadn’t undermined its faith in the ability of the economy to create jobs. Royal Dutch Shell booked a third quarter loss of $7.4 billion while oil company saw its profit fall to $1.1 billion. Silver followed gold’s climb, rising 0.1 percent to $15.94 an ounce.
At 4.3% year on year in September from 4.2% in August, however, credit extended to households remains lacklustre by historical standards. Shares in Southeast Asia were lower.
CURRENCIES: The dollar slipped to 120.73 yen from 121.07 yen in the previous trading session. The euro was at $1.0925-0926, down from $1.1049-1050, and at ¥131.97-98, down from ¥133.07-09. Lower rates also keep moves in the US dollar DXY, -0.21% in check.
That decision was in line with what economists had been expecting, but a small minority of watchers thought it was possible that America’s central bank might slightly hike lending rates at either this meeting or the next one in December.
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Williams said that he still thinks falling energy prices and a rising dollar are temporary factors that will start to fade.
