Fed tapering, oil prices, interest rates

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Employees wearing protective masks work in the trading room at the Daiwa Securities Group Inc. headquarters in Tokyo, Japan, on Thursday, Oct. 14, 2021.

Toru Hanai | Bloomberg via Getty Images

SINGAPORE — Asia-Pacific markets were mixed Thursday as investors digested the U.S. Federal Reserve’s indications that its run of ultra-easy monetary policy since the start of the pandemic is coming to a close.

In Australia, shares struggled for gains. The benchmark ASX 200 was down 0.17% as sectors such as energy and materials fell 0.85% and 0.34%, respectively.

Japan’s Nikkei 225 jumped nearly 2% in early trade while the Topix index was up 1.5%. In South Korea, the Kospi advanced 0.63%.

Thursday’s session in Asia follows overnight gains on Wall Street.

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Stateside, the Fed said it will accelerate the reduction of its monthly bond purchases — the central bank will be buying $60 billion per month of bonds starting in January, down from December’s rate of $90 billion, and said that it will likely continue that trajectory in the months ahead.

Once that wraps up, in late winter or early spring, the central bank expects to start raising interest rates. Projections released overnight indicate that Fed officials see as many as three rate hikes coming in 2022, with two in the following year and two more in 2024.

“Markets seemingly have taken the tilt in their stride given three hikes were close to being priced into the meeting and expectations were high for an accelerated taper profile,” said Tapas Strickland, director of economics and markets at the National Australia Bank, in an early Thursday note.

“One gets the impression on that profile that the Fed could move as early as March 2022, though of course the Omicron variant is one key uncertainty as is the taper profile which plays to the view of the first rate hike being in May 2022 and which is 90% priced,” he added.

Currencies and oil

In the currency market, the U.S. dollar last traded at 96.511 against a basket of its peers.

The Japanese yen weakened to 114.15 against the dollar, from levels near 113.70 earlier in the week. The Australian dollar changed hands at $0.7157, down some 0.14%.

Oil prices advanced on Thursday during Asian trading hours, with U.S. crude higher by 1.02% at $71.59 a barrel.

CNBC’s Jeff Cox contributed to this report.



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