Posted on

Shares in Asia set to slip despite Wall Street surge overnight


Stocks in Asia were set to slip at the open despite an overnight surge on Wall Street, with the Dow Jones Industrial Average posting a gain of more than 200 points.

Nikkei 225 in Japan. The Nikkei futures contract in Chicago was at 21,440, as compared to the index’s last close at 21,608.92. The Japanese markets were closed on Thursday for a holiday.

Meanwhile, shares in Australia gained in early trade as the ASX 200 advanced more than 0.5 percent, with almost all the sectors in positive territory.

In overnight market action stateside, the 30-stock Dow surged 216.84 points to close at 25,962.51 and the S&P 500 ended its trading day 1.1 percent higher at 2,854.88. The Nasdaq Composite also saw gains as it rose 1.4 percent to close at 7,838.96.

The moves upward in the major stock indexes on Wall Street were driven by gains in the technology sector and the latest policy statement from the U.S. Federal Reserve.

On Wednesday, the Fed said it does not expect to raise rates at all in 2019. The central bank had forecast at least two rate hikes for this year back in December. The Fed added that it expects to end its balance-sheet reduction process by the end of September.

“Markets have continued to digest the implications of a dovish Fed that looks set to leave the Fed Funds rate unchanged this year and potentially next. Tech shares have led the gains in equities, although financials have continued to struggle,” Rodrigo Catril, a senior foreign exchange strategist at National Australia Bank, said in a morning note.

Treasury yields fell sharply on Wednesday, with the benchmark 10-year rate hitting its lowest level in a year. The yield traded at 2.53 percent on Thursday while the short-term 2-year rate held at 2.41 percent. Yields move inversely to prices.

The U.S. central bank did, however, lower its economic growth forecast for 2019, raising concerns over a possible slowdown in the economy.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.495 after bouncing back strongly from lows below 96.0 yesterday.

“The dovishness of the Federal Reserve should have been widely negative for the US dollar but instead of extending Wednesday’s slide, the greenback rebounded against all of the major currencies,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in an overnight note.

The Japanese yen traded at 110.76 against the dollar after touching highs below 110.5 in the previous session, while the Australian dollar changed hands at $0.7107 after slipping from highs above $0.716 yesterday.

— CNBC’s Fred Imbert contributed to this report.


Top News & Analysis