Mixed response on Asian markets to US Fed reserve decision today

“Global markets have spent most of this month rising on bets that central banks, led by the Fed, will move to a softer monetary policy…”

Asian equities are mixed this morning, with attention now turning to the US Federal Reserve’s key policy decision later today. Meanwhile investors remain skittish watching developments in the Middle East after the attack on Saudi oil facilities rocked markets.

News that Riyadh will get its two major installations back online earlier than expected sent crude prices tumbling yesterday, and they fell further in Asia, though analysts said there was nervousness on trading floors about future oil security.

With fears of a military retaliation against Iran – who UP President Trump accuses of being behind the strikes – low for now, focus is now on the Fed, which is expected to cut interest rates while its post-meeting statement will be closely followed for clues about future plans.

Global markets have spent most of this month rising on bets that central banks, led by the Fed, will move to a softer monetary policy to offset a slowdown in most economies exacerbated by the China-US trade war.

OANDA senior market analyst Jeffrey Halley says that a rate cut of 25 basis points is universally regarded as a done deal by global markets.

“What will be closely watched is the press conference 30 minutes later, where we will gain more clarity as to whether the Fed has moved to an explicit easing bias.

“The likelihood of a shift from neutral to easing will be high as the (policy board) will not be able to ignore the storm cloud around the rest of the world that must eventually start raining on the United States.”

Oxford Economics estimates the Fed will cut three more times this year, which would erase all its 2018 rate hikes.

The Fed has been forced to pump more than $100 billion into US financial markets owing to a tightening of liquidity that had seen short-term lending rates spike for companies.

Key figures around 0230 GMT

Tokyo – Nikkei 225: UP 0.1 percent at 22,012.72 (break)

Hong Kong – Hang Seng: UP 0.1 percent at 26,828.10

Shanghai – Composite: UP 0.4 percent at 2,989.10

West Texas Intermediate: DOWN 25 cents at $59.09 per barrel

Brent North Sea crude: DOWN eight cents at $64.47 per barrel

Euro/dollar: DOWN at $1.1068 from $1.1071 at 2100 GMT

Dollar/yen: UP at 108.18 yen from 108.13 yen

Pound/dollar: DOWN at $1.2487 from $1.2497

Euro/pound: UP at 88.63 pence from 88.57 pence

New York – Dow: UP 0.1 percent at 27,110.80 (close)

London – FTSE 100: FLAT at 7,320.40 (close)

SOURCE: Agence France-Presse