Asia report: Markets mixed as investors mull Fed decision, trade

Markets in Asia finished in a mixed state on Thursday, as investors digested the latest decision from the US Federal Reserve overnight, after it stood pat on interest rates and signalled it would not raise rates in 2020.

In Japan, the Nikkei 225 was up 0.14% at 23,424.81, as the yen weakened 0.08% against the dollar to last trade at JPY 108.65.

Looking at the benchmark index’s major components, automation specialist Fanuc was up 1.11% and technology conglomerate SoftBank Group rose 1.05%, while fashion firm Fast Retailing was 0.05% weaker.

The broader Topix index went the other way in Tokyo, finishing its trading session down 0.12% at 1,712.83.

On the mainland, the Shanghai Composite lost 0.3% to 2,915.70, and the smaller, technology-focussed Shenzhen Composite was 0.19% weaker at 1,636.33.

South Korea’s Kospi rose 1.51% to 2,137.25, while the Hang Seng Index in Hong Kong advanced 1.31% to 26,994.14.

Both of the blue-chip technology stocks were well into the green in Seoul, with Samsung Electronics up 2.7%, and chipmaker SK Hynix 3.47% firmer.

Investor focus was largely on the Federal Reserve decision out of the United States for much of the session, as policymakers sated investor appetite by keeping its interest rate targets steady for December.

At the same time, the Federal Open Market Committee signalled that, at this stage, it was not expecting to make any changes to its policy or to interest rates throughout 2020.

“As suspected last Friday’s bumper payrolls report appears to have reinforced US policymaker’s confidence in the labour market as well as the US economy," said CMC Markets analyst Michael Hewson.

"Rather perversely the changes in the statement actually caused the US dollar to fall, despite the prospect of no changes next year.

"What did change was that Fed officials nudged their inflation expectations downwards for next year, as well shifting downwards the rate dot path expectations for both 2020, 2021 and 2022, and it is this it would appear that prompted the US dollar to weaken, and bond yields to slip back.”

Market watchers were also keen for any updates to the trade situation between Washington and Beijing, ahead of the Sunday deadline set by the US for a fresh round of 15% tariffs on Chinese goods.

Market chatter was that Washington would end up extending the deadline for those tariffs, as Reuters reported that Donald Trump would meet with senior trade officials to discuss the issue.

“I’m expecting them to raise the tariffs on Sunday,” Reuters quoted a source familiar with the plans as saying.

“The administration is preparing its talking points about how that’s the right thing to do.

“The message is that it will not be painful.”

Oil prices were higher as the region went to bed, with Brent crude last up 0.93% at $64.32 per barrel, and West Texas Intermediate rising 0.63% to $59.13.

In Australia, the S&P/ASX 200 slid 0.65% to 6,708.80, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.1% higher at 11,307.98.

The Wellington bourse was buoyed by an announcement from the country’s finance minister of an additional NZD 12bn in capital spending over the next five years - more than half of which would be poured into road and rail infrastructure.

It was a mixed end to the day for the down under dollars when compared to the greenback, as the Aussie strengthened 0.07% to AUD 1.4532, while the Kiwi weakened 0.07% to NZD 1.5194.