Asian shares look set to rise for a sixth straight session on Thursday after the Federal Reserve left US rates unchanged and plotted a lower trajectory for future hikes, slugging the dollar and boosting commodity prices.
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The report cites solid employment gains, despite a steady unemployment rate, and growing household spending as positive trends in the economy, though businesses broadly still appear reluctant to make serious investments. “We do not discuss politics at our meetings and we do not take politics into account in our decisions”. Fed policymakers chose to keep the federal funds rate in a range between one-quarter and one-half percent.
ANALYST VIEWPOINT: “The Fed, until they raise rates, are going to be the primary focus of the markets”, said J.J. Kinahan, chief market strategist at TD Ameritrade. Former Rep. Ron Paul, R-Texas, made criticism of the Fed a central theme of his 2008 and 2012 presidential runs.
“Market sentiment is being helped by the prospect of accommodative policy for longer, even if the Bank of Japan is struggling to deliver”.
Based on history, the Fed wants to prepare investors for a forthcoming rate increase and avoid having a small rate hike trigger a stock market plunge. It’s the first time more than one dealer has gone against the consensus during the week of a policy meeting since last September, data compiled by Bloomberg show.
After a two-day meeting, BoJ policymakers set a target to raise government bond yields as part of their drive to kickstart inflation. At 2:30, the U.S. Dollar Index, which is generally expected to strengthen with higher rates, has fallen 0.4% to 95.64.
“Our decision does not reflect a lack of confidence in the economy”, said Federal Reserve Chair Janet Yellen during a post-meeting press conference.
Futures on the S&P 500 Index declined 0.1 per cent after the underlying gauge climbed 1.1 per cent on Wednesday after the Fed announcement.
Government bond yield curves, which measure borrowing costs across different maturities, initially steepened in response to the BOJ’s moves, but the impact quickly waned.
Wall Street is watching closely what Yellen has to say about interest rates in America.
The dollar fell 0.2 per cent to 100.15 yen and touched a low of 100.12 yen at one point, its lowest level since August 26.
The strength among gold stocks comes amid a notable increase by the price of the precious metal, with gold for December delivery climbing $12.40 to $1,330.60 an ounce.
U.S. crude rose 2.29 per cent after data showed a bigger-than-expected draw in inventories.
Traders’ expectations for a December hike rose slightly after the statement, to 59.3 percent from 59.2 percent on Tuesday, according to CME Group’s FedWatch program.
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The euro rose modestly against the dollar to a session high of $1.1196 after the Fed statement, recovering from earlier losses.
