Asian shares benefit from Fed’s dovish appearance, risk-aversion limits rally
|- Global run towards easy monetary policy directs market moves.
- Other than BOE and BI, political plays surrounding the US, China and Iran should also gain major market attention.
While Fed’s readiness to respect the other central bank doves initially set the stage for Asian shares’ increase, statements favoring rate cuts from the Bank of Japan (BOJ) and Reserve Bank of Australia (RBA)’s Lowe further strengthened the stocks. Though, fears of global recession and geopolitical tension between the US and Iran stopped the rally.
The US Federal Reserve finally dropped its favorite term “patience” from the rate statement that pushed investors to ignore mostly neutral statements from Chairman Jerome Powell in search of clues for a rate cut during 2019.
The BoJ and the RBA's Governor Philip Lowe were also dovish enough to trigger risk-off waves later on.
With this, MSCI’s index of Asia-Pacific shares ex-Japan is close to 1.0% while Japan’s Nikkei is currently adding 0.7% by the time of writing.
China’s Hang Seng praised the US President Donald Trump’s latest readiness to have good relations with the dragon nation by flashing more than 1.0% gain whereas Australia’s ASX 200 in currently gaining 0.33%.
Furthermore, India’s BSE Sensex adds 0.20% but New Zealand’s NZX50 and Indonesia’s Jakarta Composite Index seems to buck the trend.
Global risk barometer, the US 10-year treasury yield dropped to 1.987%, the lowest since November 2016.
Given the risk tone likely being the major catalyst of the day, political plays should be given an upper hand over the economic calendar. However, monetary policy decisions from the Bank of England (BoE) and Bank Indonesia (BI) could gain additional attention after the latest bear play.
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