Asian markets sent mixed messages about the US Federal Reserve’s new-found dovishness, with equities outside Japan rallying alongside traditional havens from sovereign bonds to the yen. Oil pared its weekly advance.
The MSCI Asia Pacific Excluding Japan Index headed for a one-month high as investors took solace from the Fed’s acknowledgment that international risks figured in its calculations on when and if to raise US borrowing costs.
The yen held on to a gain of about 1 percent since the Fed held rates, while Australian and South Korean bonds jumped after the decision sparked the biggest advance in two-year Treasuries since quantitative easing started six years ago.
“[Fed Chair Janet] Yellen kept referring to the strong dollar and turmoil offshore, those were the main issues,” Mark Lister, head of private wealth research at Craigs Investment Partners Ltd in Wellington, which manages about US$7.2 billion, said by phone.
“They probably have taken a little bit more notice of what’s happening overseas, in China and emerging markets, than some people might have expected. Every meeting is going to be considered live from now on, but it’s looking like a better than even chance that it’s next year’s story,” he said.
For the third straight quarter Fed officials lowered projections for the funds rate in coming years.
“Recent global economic and financial developments might restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” officials said in a statement.
While the median projection from Fed officials signals a rate increase by year-end, Fed fund futures show traders anticipate the central bank might wait until next year.
The MSCI Asia Pacific Index climbed 0.3 percent by 2:31pm in Tokyo, with Japan’s TOPIX snapping a two-day advance to slide 1.6 percent. The gauge that excludes Japanese shares climbed 1 percent as the Hang Seng China Enterprises Index increased 1.1 percent amid data showing property prices rising in more Chinese cities last month.
“It’s a supportive outcome for markets and provided a reminder the Fed’s not going to do anything stupid,” Shane Oliver, global strategist at AMP Capital Investors Ltd, which manages US$112 billion, said by phone from Sydney.
“If you’re overweight equities, you probably say: the Fed’s not going to harm us. It’s quite possible that this gets pushed out further and further, into next year,” he said.
Standard & Poor’s 500 Index futures advanced 0.1 percent after the gauge dropped 0.3 percent. Ten-year Australian yields dropped 10 basis points to 2.77 percent. Three-year Korean notes rose the most in three months, pushing their yield to a record low. Treasuries maintained Thursday’s gains.
Futures traders are pricing in a 17 percent probability the central bank increases its target range next month, a 44 percent chance by the December meeting and a 52 percent likelihood by January.
Yellen said that most policymakers still expect to raise rates this year.
Nine of the 10 industry groups on the Asia Pacific Excluding Japan Index advanced yesterday. The measure has advanced 3.3 percent since Friday last week, heading for only its second back-to-back weekly gain since April.
Australia’s S&P/ASX 200 Index added 0.6 percent, while the KOPSI climbed 0.8 percent in Seoul. India’s S&P BSE SENSEX jumped 1.6 percent, heading for its biggest weekly increase since June.
The Shanghai Composite Index gained 1 percent, paring its weekly drop to less than 3 percent. The Hang Seng China Enterprises Index has gained 3.5 percent this week amid a rebound in insurance shares.
China Resources Land Ltd and China Overseas Land & Investment Ltd, the two biggest state-owned developers listed in Hong Kong, climbed more than 2 percent. New-home prices rose in 35 cities, compared with 31 in July, the National Bureau of Statistics said yesterday. Prices dropped in 25 cities, fewer than the 29 in July, and were unchanged in 10.
The Bloomberg Dollar Spot Index rebounded from near its lowest level since Aug. 24. The yen rose 0.2 percent to ¥119.84 per US dollar. The era of a weaker yen is coming to an end and Japan’s currency might strengthen toward ¥115 per dollar, former Japanese vice finance minister Eisuke Sakakibara said.
The euro weakened 0.3 percent to US$1.1403, having hit its strongest since Aug. 26 in the wake of the Fed’s decision. The joint currency was weaker against most of its 16 major peers yesterday.
Norway’s krone slid 0.6 percent as West Texas Intermediate (WTI) crude retreated 0.4 percent, paring its weekly advance to 4.7 percent.
Oil is still down more than 20 percent from this year’s closing peak in June amid a global oversupply that Goldman Sachs Group Inc predicts might keep prices low for the next 15 years. US crude inventories decreased through Friday last week, as output slid for a sixth week, government data showed.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained