| 20 April 2024, Saturday |

Asia stocks try tentative rally, Fed in no rush to taper

Asian stocks rose somewhat on Thursday as the US Federal Reserve said it was not in a rush to remove stimulus, though sentiment remained shaky as investors awaited Beijing’s response to the recent stock market sell-off.

The Senate also voted to move forward on the $1.2 trillion infrastructure measure, which is long overdue in the United States.

China’s stock markets rose slightly on rumors that officials had called banks overnight to allay fears over new rules governing the education industry and foreign listings.

“The message is that profit has only become a filthy word in particular areas of the Chinese system of ‘Socialism with Chinese features,'” said Ray Attrill, head of NAB’s FX strategy.

“It remains to be seen how effective the authorities’ messaging will be in establishing a floor under the broader Chinese stock market.”

For the time being, blue-chip stocks are up 1.6 percent, but are still down 5% for the week, while the Shanghai Composite Index is up 1.2 percent.

After falling to its lowest level since early December on Wednesday, MSCI’s broadest index of Asia-Pacific equities outside Japan rebounded 1.9 percent. The Nikkei in Japan gained 0.6 percent, while the KOSPI in South Korea remained unchanged.

S&P 500 futures eased 0.1%, as did EUROSTOXX 50 futures . Nasdaq futures dipped 0.3% perhaps weighed by a retreat in Facebook stock.

Facebook Inc shed 3.5% after the company warned revenue growth would “decelerate significantly,” even as it reported strong ad sales.

Markets had see-sawed overnight when the Federal Reserve policy statement said “progress” had been made toward its economic goals, seeming to bring nearer the day when it might start tapering its massive asset buying campaign.

Data due later Thursday is expected to show the U.S. economy likely grew at the fastest pace in 38 years last quarter as government aid and vaccinations fueled spending.

However, Fed Chair Jerome Powell took a dovish turn by emphasising that they were “some ways away” from substantial progress on jobs that is needed to start tapering.

“The difference in tone between the statement and press conference may simply reflect Powell being on the dovish side of the Committee,” said JPMorgan economist Michael Feroli.

“In any event, there are three more job reports before the November meeting, and two more between the November and December meetings,” he added. “We continue to expect a December announcement, though we see a risk it could occur in November.”

The next Fed meeting is not until late September, offering the market a break from tapering talk.

For bonds, the net result was that U.S. 10-year yields were steady at 1.24%, not far from recent five-month lows of 1.128%.

The pattern was the same for the dollar, which edged up on the FOMC statement only to flag on Powell’s remarks.

That left the euro up at $1.1855 , and some way from its recent four-month trough of $1.1750.

The dollar faded to 109.75 yen , from a top of 110.58 early in the week. All of which saw the dollar index dip to 92.157 , off its recent top at 93.194.

In commodity markets, gold nudged up to $1,815 an ounce but remains in the $30 range of the past 17 sessions.

Oil prices firmed after data showed U.S. crude inventories fell to pre-pandemic levels, bringing the market’s focus back to tight supplies rather than rising COVID-19 infections.

Brent was last up 26 cents at $75.00 a barrel, while U.S. crude added 28 cents to $72.67.

  • Reuters