Share

Most Asian markets boosted by Fed but dollar sinks

Hong Kong - Asian markets rallied and the dollar sank on Thursday after the Federal Reserve lifted US interest rates but gave a more dovish outlook for future hikes, while the euro was also boosted by the expected victory of the incumbent party in Dutch elections.

After a much-anticipated meeting the US central bank lifted borrowing costs by a quarter of a point but suggested only another two rises this year, confounding talk of a possible three or four.

Fed boss Janet Yellen also said that while President Donald Trump's planned big-spending, tax-cutting plans could fuel growth and inflation, she would keep a wait-and-see attitude before making any decisions on how to shape monetary policy.

The news, which came with an upbeat assessment of the world's top economy, fired US stocks and sent the greenback tumbling in US trade.

And that continued into Asian business, with Hong Kong up 1.2%, Shanghai adding 0.7% and Seoul advancing 0.6%.

Sydney ticked up 0.2% and Singapore was 0.8% higher, while there were also healthy gains in Wellington, Taipei, Jakarta and Manila.

"Whether folks agree or disagree with the need to hike, the key here is that the Fed has signalled to markets, and importantly US and global businesses, that it is in control and the economy is moving as expected," said Greg McKenna, chief market strategist at AxiTrader, in a note.

"Janet Yellen stressed in her press conference that the Fed's decision today was a reflection of where the economy is now with reference to the Fed's mandate.

She highlighted that the (policy board) was not making a judgement on what impact the Trumponomics stimulus might have on the economy."

'Greenback under pressure'

But Tokyo ended the morning 0.1% lower as the dollar retreated against the yen, hurting Japanese exporters.

The US unit bought ¥113.32 on Thursday, down from Wednesday in New York and well off the levels above ¥115 touched earlier this week.

The greenback was also sharply down elsewhere, with the Australian dollar surging more than 1%, South Korea's won 0.9% higher and the Mexican peso soaring two percent. The New Zealand, Canadian and Taiwanese dollars also posted strong gains of about 1%.

Stephen Innes, senior trader at OANDA, said: "The absence of any observable hawkish guidance from the Fed will leave the greenback under pressure near term."

The euro sat comfortably above $1.07, more than one cent up from earlier on Wednesday, as exit polls showed Dutch Prime Minister Mark Rutte easily defeating far-right, anti-EU rival Geert Wilders in a vote considered a bellwether of populist support in Europe.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.88
+0.3%
Rand - Pound
23.87
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders