Asian stock markets held fairly steady Friday, holding on to gains in the week driven by USA and Japanese central bank policy decisions that fueled investors’ belief that low rates will be around for a few more months.
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The nation’s 30-year bond yields dropped six basis points to 0.53 percent, while those on two-year notes were little changed at minus 0.66 percent.
German bunds advanced, pushing benchmark 10-year yields to a two-week low, after the Federal Reserve held off on raising interest rates and scaled back the number of rate hikes it expects next year.
Fed officials also cut their 2016 growth forecast for the us economy to 1.8%, from a 2.0% projection in June, and lowered their long-term view on the growth rate to 1.8% from 2%. The central bank said near-term risks to its economic outlook are “roughly balanced”.
Fed chair Janet Yellen said: “We judged that the case for an increase has strengthened, but decided for the time being to wait for further evidence of continued progress toward our objectives”.
Still, given the magnitude of the Treasury rally-which led yields to erase the entire increase they had logged during the two weeks ahead of the Fed meeting-shows that “the Fed’s last missive is likely to be a gift that keeps on giving”, said Aaron Kohli, interest-rate strategist at BMO Capital Markets, in an email.
BANK OF JAPAN: The Japanese central bank said it will hold its short-term policy rate at negative 0.1 percent and might cut it further.
New Zealand government bonds closed higher after the Reserve Bank of New Zealand left its official cash rate unchanged at a record low of 2.00 percent. The bank said it will continue asset purchases at a rate of about 80 trillion yen ($787 billion) a year. The technology index .splrct rose 0.5 percent, giving the benchmark S&P 500 index its biggest boost.
The Hang Seng Index in Hong Kong and Korea’s Kospi were both up 1%, while the S&P/ASX 200 rose 0.8% and the Shanghai Composite Index was up 0.7%.
Financial markets, which were watching closely for any sign of a clear timing for rate increase in the world’s biggest economy, responded with the dollar losing value – standing at nearly $1.31 versus the pound.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked up 0.15 percent, driven by gains in Australia, and within sight of their highest levels since July 2015.
ENERGY: Benchmark U.S. crude added 28 cents to $45.63 per barrel in electronic trading on the New York Mercantile Exchange. The contract added 69 cents on Wednesday.
USA stocks were broadly higher Thursday, helped by a rise in prices for crude oil and other commodities.
The dollar index, which measures the greenback’s value against a basket of six major currencies, touched a low of 95.373 at one point on Thursday, its weakest level since September 16.
CURRENCIES: The dollar climbed to 101.10 yen from 100.84 yen in late trading Thursday.
Dow member Boeing rose 1.0 per cent following a World Trade Organisation ruling that said the European Union had failed to end illegal subsidies for Airbus.
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