Asian stocks cheer Fed’s dovish pause, trade/politics in the spotlight

  • Asian shares benefit from the Fed Chair’s cautious statements.
  • Fears of US-China trade war, UK election checks the risk-on.

Asian equities are on the front foot, with the MSCI’s index of Asian Pacific shares rallying to the monthly top, as traders consider the US Federal Reserve (Fed) Chairman’s comment as dovish. Fed Chair Jerome Powell stepped back from any upbeat comments while giving high importance to inflation for the next year’s rate hikes. The Federal Open Market Committee’s (FOMC) stood pat on monetary policy while expecting no change in Gross Domestic Product (GDP) and rate hikes in 2020.

Japan’s NIKKEI registers 0.33% gains to 23,455 while Chinese shares are struggling between gains and losses amid fears of a trade war between the United States (US) and China. The US President Donald Trump will today meet his trade advisers to take a decision on the tariffs ahead of the December 15 deadline. Goldman Sachs anticipates the US will eventually scrap the tariffs.

Markets in India are cautiously optimistic ahead of the monthly Industrial Output data while that of Indonesia, Philippines and Australia stay on the back foot amid trade jitters and calls of slower growth of the Chinese economy.

With this, the US 10-year treasury yields recover initial losses to 1.80%. Also contributing to the market’s risk tone is the general election in the United Kingdom (UK) where a clear parliamentary victory by the Conservatives is a must to witness a soft Brexit.

Additionally, nearness to monetary policy meetings in Europe and Switzerland, coupled with a lack of major data, keep the equity bulls in check.

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