Asia markets climb as Fed signals possible rate cut
Published: 08:35 PM, 5 June 2019
Daily Bangladesh Desk
Asian markets rose Wednesday, tracking rallies on Wall Street after the US Federal Reserve chief indicated greater openness to lowering interest rates and acknowledged the impact of trade tensions on growth.
Speaking in Chicago on Tuesday, Fed Chair Jerome Powell admitted that ongoing trade conflicts had dimmed the growth outlook — remarks widely seen as opening the door to a potential interest rate cut.
“We are closely monitoring the implications of these developments for the US economic outlook and, as always, we will act as appropriate to sustain the expansion,” Powell said.
The comments signal a shift in the policy of the Fed, which has kept interest rates unchanged in 2019 after a series of hikes in 2018 and previous years.
“Powell changed the Fed messaging just enough to avoid signalling a shift from patient to panicked… it was music to US investors’ ears who have been starved of positive news of late”, said Stephen Innes, Managing Partner at SPI Asset Management.
The Dow closed with gains of 2.1 percent.
In Asia, Tokyo jumped 1.9 percent, while Hong Kong was up 0.8 percent. Shanghai and Seoul edged up 0.3 percent and Singapore climbed 0.6 percent.
Sydney also rose 0.6 percent even as government statistics showed near-zero growth the previous quarter, underscoring fears for the economy.
The Australian economy has avoided recession for almost 28 years, but a housing slump, rising unemployment and below-target inflation prompted the central bank on Tuesday to cut its key interest rate to a historic low of 1.25 percent.
– ‘Economy at crossroads’ –
The buying was also supported by more favourable news on the trade front, with Beijing backing negotiations to resolve its spat with Washington and congressional Republicans opposing President Donald Trump’s tariff threats against Mexico.
Worries over the US-China trade war “have eased following reports that China’s commerce ministry said the trade friction should be resolved through dialogue”, Okasan Online Securities’ chief strategist Yoshihiro Ito said in a commentary.
But a new World Bank report showing reduced global growth forecasts for the year suggested that investors could expect the trade headwinds to continue for some time yet.
The world economy is now expected to expand by 2.6 percent this year, three tenths of a percentage point lower than the January forecast, and well below the three percent growth seen in 2018, according to the Global Economic Prospects report.
“The bottom line is that the global economy is coming to a crossroads,” World Bank economist Ayhan Kose, who oversaw the report, told AFP.
“We need to find ways to stabilise growth and I think further escalation of these trade tensions is now the number one risk that could actually weigh on the outlook,” he told AFP.
The US-China trade spat has seen the top two superpowers deploy tit-for-tat tariffs on trade worth hundreds of billions of dollars, with no date set for stalled talks to resume.
But there are hopes that Trump and Chinese President Xi Jinping will meet at the G20 summit in Japan this month to jump-start negotiations.
– Key figures around 0240 GMT –
Tokyo – Nikkei 225: UP 1.9 percent at 20,800.64 (break)
Hong Kong – Hang Seng: UP 0.8 percent at 26,978.31
Shanghai – Composite: UP 0.3 percent at 2,870.61
Pound/dollar: UP at $1.2707 from $1.2699 at 2100 GMT Tuesday
Euro/pound: UP at 88.63 pence from 88.61 pence
Euro/dollar: UP at $1.1263 from $1.1254
Dollar/yen: DOWN at 108.05 yen from 108.14 yen
Oil – Brent Crude: DOWN 24 cents at $61.73 per barrel
Oil – West Texas Intermediate: DOWN 29 cents at $53.19 per barrel
New York – Dow: UP 2.1 percent at 25,332.18 (close)
London – FTSE 100: UP 0.4 percent at 7,214.29 (close)
- Mithun, Mushfiqur star as Bangladesh win warm-up
- Quader orders to repair flood-hit roads before Eid
- Blackout forced 4m Venezuelan to leave country
- Renu`s brother heartbreaking status
- Boris Johnson to be next UK PM
- Chairmanship odds in JP: Rowshan`s ambiguous state
- Bribery scam: Ex-ACC Director Basir sent to jail
- New research unveils real cause of heart attack
- Four killed in Narayanganj’s 4 Upazilas
- ‘Stern action if killing people over child lifting rumor’
- 5828 multimedia classrooms installed in Rajshahi
- Sergeant Kibria’s father files writ seeking compensation
- Minni’s bail hearing Jul 30
- Three father of a newborn baby!
- Shokh to play Minni’s role in Eid
- Habits that extremely harmful for liver
- Rain likely to increase, temperature may fall
- Advance train tickets to be sold at 5 spots
- Fire breaks out at CMCH Psychiatry department
- 25 schoolgirls fall sick from laughing too much
- ‘Lion King’ roars as surpassing ‘Avengers’ record
- Ronaldo will not face rape charges
- Critical security flaw found in VLC Player
- Two robbers killed in Sundarbans gunfight
- Large-scale government data hacks in Russia, Bulgaria
- Mehazabien with new story
- Shinzo Abe wins Japan’s upper house poll
- National Public Service Day-2019 today
- Renu lynched in Badda: 2 more held
- Drug peddler killed in Meherpur gunfight
- All News »
- Priya’s allegation is not correct: US Ambassador
- Child’s head in bag, youth lynched in Netrokona
- ‘Lady Killer’ Tisha to fight against formalin in food
- Priya falsify to Trump about Bangladesh
- Woman lynched over child-lifting rumour: 500 sued
- HSC exam results tomorrow
- Rifat murder: Minni at Police Line for questioning
- Renu lynched in Badda, 3 held
- Police want 10-day remand of Minni
- Rifat killing mastermind Minni; says police
- 8 boards attain 71.85 pc pass rate
- Stocks maintain positive trend
- None took ‘liability of denying legal support’ to Minni
- Edu Minister`s husband Toufiq Nawaz severely ill
- Bangladesh to play warm-up match today
- How to get HSC result
- Minni sent to jail
- HSC pass rate increases 7.9 pc
- Court dismisses Minni’s two petitions
- Put Myanmar for Rohingya return; FM urges US
- PM to inaugurate ‘Benapole Express’ Wednesday
- Country’s 7th mobile assembling plant to be launched with FDI
- Ershad’s namaz-e-janaza held in Rangpur
- Minni on 5-day remand
- Ershad’s body in Rangpur
- Man accused in 14 cases killed in gunfight
- Google shuts down AdSense on Android, iOS for web
- Humanity for animal !
- Another hit of Gully Boy!
- DIG Mizan shown arrested in bribery case