Asia stocks trade cautiously after Fed keeps rates unchanged

Stocks in Asia were cautious in morning trade after the U.S. Federal Reserve left interest rates unchanged at its latest policy meeting.

Japan’s Nikkei 225 was largely flat while the Topix index saw gains of 0.11 percent. South Korea’s Kospi rose 0.16 percent.

In Australia, the ASX 200 was slightly higher in the morning, with the major sectors in mixed territory. Energy stocks fell by 0.7 percent while the heavily weighted financial subindex gained 0.45 percent.

The mainland China markets, which are due to open at 9:30 a.m., will be closely watched as trade tensions between Washington and Beijing continue to weigh on investor sentiments.

One economist warned that relations between the U.S. and China could get more frosty now that the midterm elections stateside are over.

“The upshot is that there will be more noise and volatility on China,” TS Lombard’s chief U.S. economist, Steve Blitz, said in a note on Thursday, commenting on the post-election environment. Many Democrats, including Sen. Chuck Schumer, are “China hawks,” Blitz said.

Investors will get a read on some economic data at 9:30 a.m. HK/SIN with the release of the country’s Consumer Price Index and Producer Price Index for the month of October.

Symbol
Name
Price

 

Change
%Change

NIKKEI

HSI

ASX 200

SHANGHAI

KOSPI

CNBC 100

Fed leaves rates unchanged

Overnight on Wall Street, the S&P 500 slipped 0.25 percent to close at 2,806.83 and the Nasdaq Composite saw declines of 0.5 percent to 7,530.88 by the closing bell. The Dow Jones Industrial Average, on the other hand, climbed 10.92 points to close at 26,192.22 — marking a four-session winning streak.

The moves came after the Fed kept interest rates unchanged, as was widely expected. The central bank said in a statement, however, that it expects “further gradual increases” in the overnight rate. The Fed also did not mention the volatility that has hit the market recently.

“This Fed meeting may be the catalyst (that) slows up the feel good factor that the markets have enjoyed over the last few sessions post the US midterm election results,” Rakuten Securities Australia said in a morning note.

“We’d seen a positive ‘risk on’ trading environment after the midterms (passed) largely in line with expectations, but with the Fed confirming that they are sticking with their well defined path we may see some of the investor concern returning to markets and some further downside for the stock indices over the next few sessions,” the note said.

The Fed has hiked rates three times this year and is forecast to raise one more time before year-end.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.724 after seeing lows around the 96 handle yesterday.

The Japanese yen was at 113.97 against the dollar after weakening from levels above 113.6 in the previous session. The Australian dollar traded at $0.7269 after seeing highs above $0.729 yesterday.

— CNBC’s Fred Imbert contributed to this report.


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