Asian Markets Mostly Higher On Fed Comments

Asian stock markets are trading mostly higher on Thursday, following the broadly positive cues overnight from Wall Street, reflecting a positive reaction to the US Federal Reserve’s highly anticipated monetary policy announcement, with the Fed deciding to boost the pace of reductions to its asset purchases program and hike interest rate. Asian markets closed mixed on Wednesday.

The central bank, citing rising inflation and further improvement in the labor market, said it has decided to reduce the monthly pace of its net asset purchases by $30 billion per month, double the previously announced $15 billion per month.

Despite the prospect of sooner than expected rate hikes, analysts suggested traders were pleased with the increased level of certainty provided by the Fed’s latest projections.

The European Central Bank, the Bank of England and the Bank of Japan are also scheduled to announce their monetary policy decisions this week.

Meanwhile, investors remain concerned about the impact of the coronavirus Omicron variant on global economic recovery. The WHO revealed that 77 countries have now reported cases of Omicron and warned that the new variant is spreading faster than previous strains.

The Australian stock market is modestly lower in choppy trading on Thursday, extending the losses in the previous three sessions, with the benchmark S&P/ASX 200 just below the 7,300 level, despite the broadly positive cues overnight from Wall Street, with weakness in energy and materials partially offset by strength in technology stocks.

Traders also digested the U.S. Federal Reserve’s monetary policy announcement, with a decision to accelerate the pace of reductions to its asset purchases program and signalling interest rate hikes.

There are also concerns over the rising domestic Covid-19 cases, with New South Wales reporting a daily record of 1,742 new cases, but no deaths on Wednesday, of which 12 are of the new Omicron variant, which now totalled 122. Victoria also reported 1,622 new cases and nine deaths, with no Omicron cases.

The benchmark S&P/ASX 200 Index is losing 35.50 points or 0.49 percent to 7,291.60, after hitting a low of 7,277.10 earlier. The broader All Ordinaries Index is down 25.70 points or 0.34 percent to 7,610.50. Australian markets ended notably lower on Wednesday.

Among major miners, BHP Group is losing more than 1 percent, OZ Minerals is declining more than 2 percent, while Rio Tinto and Mineral Resources are down almost 1 percent each. Fortescue Metals is edging up 0.6 percent.

BHP’s proposed $41 billion sale of its worldwide oil and gas business to Woodside Petroleum has been given the green light by Australia’s competition watchdog.

Oil stocks are lower. Woodside Petroleum and Santos are losing more than 1 percent each, while Beach Energy is declining almost 2 percent and Origin Energy is down almost 1 percent.

Among the big four banks, Commonwealth Bank is edging up 0.4 percent, ANZ Banking is edging up 0.1 percent and National Australia Bank is gaining 1.5 percent, while Westpac is edging down 0.5 percent.

In the tech space, Xero and Afterpay are gaining almost 2 percent each, while WiseTech Global is advancing 4.5 percent, Zip is adding almost 1 percent and Appen is rising almost 4 percent.

Gold miners are mixed. Newcrest Mining is losing almost 1 percent and Resolute Mining is declining more than 1 percent, while Gold Road Resources is adding 1.5 percent and Northern Star Resources is edging up 0.5 percent. Evolution Mining is flat.

Shares in Qantas are down more than 1 percent after the airline said it will report a huge $1.1 billion loss for the first half and expects domestic competition to intensify in the second half.

Shares in CSL are plunging more than 8 percent after the biotech giant emerged from its trading halt following the successful closing of its $6.3 billion institutional share placement to help fund the $16.4 billion purchase of Swiss pharma firm Vifor.

In economic news, the manufacturing sector in Australia continued to expand in December, albeit at a slower pace, the latest survey from Markit Economics showed on Thursday with a manufacturing PMI score of 57.4. That’s down from 59.2 in November, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services index eased to 55.1 in December from 55.7 in November, while the composite dipped to 54.9 from 55.7 a month earlier.

Meanwhile, the unemployment rate in Australia came in at a seasonally adjusted 4.6 percent in November, the Australian Bureau of Statistics said on Thursday. That blew away forecasts for 5.0 percent and was down sharply from 5.2 percent in October. The Australian economy also added 366,100 jobs last month – again crushing expectations for an increase of 205,000 jobs following the loss of 46,300 jobs in the previous month. The participation rate was 66.1 percent, also beating forecasts for 65.5 percent and up sharply from 64.7 percent a month earlier.

In the currency market, the Aussie dollar is trading at $0.715 on Thursday.

The Japanese stock market is sharply higher on Thursday, extending the slight gains in the previous sessions, with the benchmark Nikkei 225 moving above the 28,900 level, following the broadly positive cues overnight from Wall Street, as traders digested the U.S. Federal Reserve’s monetary policy announcement, with the Fed deciding to boost the pace of reductions to its asset purchases program and hike interest rate.

The benchmark Nikkei 225 Index closed the morning session at 28,904.25, up 444.53 points or 1.56 percent, after touching a high of 29,044.51 earlier. Japanese shares ended slightly higher on Wednesday.

Market heavyweight SoftBank Group is losing almost 1 percent, while Uniqlo operator Fast Retailing is gaining more than 1 percent. Among automakers, Toyota is adding more than 1 percent and Honda is edging up 0.2 percent.

In the tech space, Advantest is gaining almost 4 percent, while Screen Holdings is adding more than 2 percent. Tokyo Electron is up almost 2 percent.

In the banking sector, Mitsubishi UFJ Financial is gaining almost 1 percent and Sumitomo Mitsui Financial is edging up 0.4 percent, while Mizuho Financial is flat.

The major exporters are lower. Panasonic and Sony are flat, while Mitsubishi Electric is edging up 0.5 percent and Canon is surging almost 5 percent.

Among the other major gainers, Nissan Motor is gaining more than 5 percent, while Canon, Nippon Yusen K.K. and Olympus are adding almost 5 percent each. Seiko Epson, Kawasaki Kisen Kaisha and Nissan Chemical are up more than 4 percent each, while Mitsui O.S.K. Lines is advancing more than 3 percent each. Kikkoman, Hino Motors, Hitachi, Alps Alpine and Denso are up almost 3 percent each.

Conversely, Shinsei Bank is plunging more than 7 percent.

In economic news, Japan posted a merchandise trade deficit of 954.8 billion yen in November, the Ministry of Finance said on Thursday. That was way short of forecasts for a shortfall of 675 billion yen following the downwardly revised 68.5 billion yen deficit in October (originally a 67.4 billion yen deficit). Exports rose 20.5 percent on year to 7.367 trillion yen, missing expectations for an increase of 21.2 percent after rising 9.4 percent in the previous month. Imports surged an annual 43.8 percent to 8.321 trillion yen versus forecasts for an increase of 40.0 percent and up from 26.7 percent a month earlier.

Meanwhile, the manufacturing sector in Japan continued to expand in December, albeit at a slower pace, the latest survey from Jibun Bank showed on Thursday with a manufacturing PMI score of 54.2.
That’s down from 54.5 in November, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services index eased to 51.1 in December from 52.1 in November, while the composite dipped to 51.8 from 52.5 a month earlier.

In the currency market, the U.S. dollar is trading in the lower 114 yen-range on Thursday.

Elsewhere in Asia, China, South Korea, Indonesia, Malaysia, Taiwan and Singapore are all higher by between 0.1 and 0.6 percent each, while Hong Kong and New Zealand are down 0.7 and 0.6 percent, respectively.

On Wall Street, stocks showed a substantial turnaround over the course of the trading session on Wednesday after moving to the downside early in the day reflecting a positive reaction to the Federal Reserve’s highly anticipated monetary policy announcement. The major averages moved sharply higher following the Fed announcement, largely offsetting the pullback seen in the two previous sessions.

After tumbling as much as 1.2 percent in early afternoon trading, the tech-heavy Nasdaq soared 327.94 points or 2.2 percent to 15,565.58. The Dow also jumped 383.25 points or 1.1 percent to 35,927.43, while the S&P 500 surged 75.76 points or 1.6 percent to 4,709.85.

Meanwhile, the major European markets also finished the day mixed. While the U.K.’s FTSE 100 Index slid by 0.7 percent, the German DAX Index edged up by 0.2 percent and the French CAC 40 Index rose by 0.5 percent.

Crude oil futures settled higher on Wednesday after the Energy Information Administration (EIA) said crude inventories in the U.S. dropped by 4.6 million barrels last week. West Texas Intermediate crude oil futures for January ended up by $0.14 or 0.2 percent at $70.87 a barrel.

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