Asian shares off 1 1/2-yr high, Trump's yuan comment in focus

TOKYO - Asian shares took a breather on Friday, hovering just below 1-1/2-year highs as investors braced for a potentially wobbly session after US President Donald Trump called China "grand champions" of currency manipulation.

Over the past month or so, financial markets have been buffeted by rising protectionism under the Trump administration, and the President's latest comments on China does little to raise confidence on trade relations between the world's two biggest economies.

His comments came just hours after his new Treasury secretary pledged a more methodical approach to analyzing Beijing's foreign exchange practices.

The offshore yuan stood flat at 6.8476 per dollar. In onshore trade, the yuan fell 6.6 percent last year in its biggest drop in over 20 years. All eyes are on the Chinese markets which open shortly.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent in early trade after four straight days of gains while Japan's yen-sensitive Nikkei was off 0.7 percent.

The MSCI world equity index, which tracks shares in 46 nations, rose 0.15 percent to 446.69 on Thursday, touching a record peak at 447.67 at one point and extending its gains so far this year to almost six percent.

Leading the gains were emerging markets, which have rallied more than 10 percent since the start of the year, thanks to signs of a pickup in global economic activity.

On Wall Street, the Dow managed to notch a record high for a tenth straight session, the longest streak since 1987. The streak of gains is the longest for the index since March 2013.

Traders have bet on tax cuts, less regulation and more infrastructure spending from Trump and the Republican-controlled Congress to bolster the US economy.

"There are strong expectations on tax cuts in the US markets. On the other hand, the chance of a Fed rate hike in March seems limited, which is also helping shares," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

US Treasury Secretary Steven Mnuchin on Thursday laid out an ambitious schedule to enact tax relief for the middle class and businesses by August, but added the Trump administration was still studying a border tax.

As Trump has promised a "phenomenal" plan by early March to cut business taxes, many investors expect more clarity when he delivers a speech to Congress on Tuesday.

Wednesday's Federal Reserve minutes, which showed that there was less urgency among voting members to raise interest rates, have helped to drive down US Treasuries yield and the dollar.

The 10-year US Treasuries yield hit a two-week low of 2.372 percent.

The dollar slipped to 112.55 yen, also a two-week low, on Thursday and last stood at 112.69 yen.

The euro fetched $1.0584, off Wednesday's six-week low of $1.0494.

Oil prices held firm near the top of their trading ranges, thanks to high compliance among the OPEC countries to curb output.

US crude futures traded at $54.36 per barrel.
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source: news.abs-cbn.com

Strong US dollar could challenge Trump agenda

NEW YORK - The strong US dollar, boosted further by the Federal Reserve's decision to raise interest rates, could pose challenges to President-elect Donald Trump's economic agenda.

The greenback shot to fresh multi-year highs against the euro and other currencies Thursday following the Fed's move Wednesday to increase the benchmark lending rate and its signal about additional rate increases in 2017.

The US currency already had been on an upward trajectory after Trump's election, amid expectations he will push policies that could unleash higher growth and inflation, leading to more interest rate hikes.

Many analysts expect the dollar to continue to rise, after gaining five percent against a basket of six currencies since Trump's election.

"We would expect the dollar to continue to strengthen," said Wells Fargo analyst Eric Viloria. The Fed's plans to raise rates further contrasts with "what a lot of other major central banks are doing."

Trump himself has warned of the negative effects of a strong dollar, saying during the campaign that "it sounds better to have a strong dollar than it actually is."

"If we raise interest rates and the dollar gets too strong, we're going to have some major problems," Trump told CNBC in May.

Investors flock to markets that have higher interest rates seeking better returns, which creates more demand for dollars.

PROS AND CONS

A strong currency has traditionally been seen as a sign of economic might among nations. But beyond that, there are some economic benefits. Consumers get better prices on everything from imported clothing and toys to luxury cars, keeping inflation low.

But while the US remains a strongly consumer-oriented economy, data show exports are becoming more important to the economy.

Exports of goods and services as a percentage of US gross domestic product rose to 12.6 percent in 2015 from 9.1 percent in 2002, according to the World Bank.

"The US has been exporting more and more," said economist Joe Naroff. "There is greater sensitivity of the economy to the strong dollar now than it was five or 10 years ago."

A wide swathe of the US economy now depends on exports, including farmers in the midwest, steel companies in Ohio and chemical companies in the Gulf Coast.

All of these sectors already were suffering from the strong dollar, according to Federal Reserve's "beige book" report on economic conditions released in November. Although it also noted that manufacturers can import raw materials at lower prices.

Trump has vowed an "America First" approach to economic policy, pressuring companies to build and keep factories in the US. Yet a strong dollar will add to the price of US exports, making it harder for them to compete in other markets.

MULTINATIONALS GET HIT

US stocks also have risen sharply since the election on optimism Trump will cut taxes, streamline regulations and boost public works spending, which would lead to higher corporate profits.

Yet, a strong dollar hits multinationals not only by making their goods more costly overseas but by forcing them to convert overseas earnings into dollars at a disadvantageous rate.

Some of these negative impacts will be offset by other Trump pledges, such as a cut in corporate taxes.

But "tax reform tends to take a long time," said Aidan Garrib, global macro strategist at Pavilion Financial.

And Garrib predicted the strong dollar would hit US companies even more than in 2014, because the greenback is even higher now.

"For sure, the strong dollar will hurt," he said.

source: news.abs-cbn.com

Asia struggles for traction, dollar near 14-year peak on Fed rally

TOKYO - The dollar on Friday stood near a 14-year peak, bond yields were highly elevated and Asian stocks struggled for traction as global markets continued adjusting to the idea of higher US interest rates.

In a move that reverberated across the financial markets, the Fed on Wednesday raised rates for the first time in a year and hinted at three hikes to follow in 2017, up from the two projected in September.

The dollar index topped the 103.00 threshold for the first time since December 2002 overnight and last stood at 103.11.

The euro was steady at $1.0410 after hitting $1.0366 overnight, its lowest since January 2003. The dollar was little changed at 118.065 yen after surging to a 10-month high of 118.660 the previous day.

The greenback was lifted as the notion of the Fed tightening monetary policy next year more quickly than first thought took the benchmark US Treasury 10-year yield to highs not seen in two years.

"World markets continue to adjust to an outlook for higher US interest rates and increased inflation risk boosted by major US tax cuts," wrote Ric Spooner, chief market analyst at CMC Markets.

Tracking the rise in the US 10-year note's yield, Japan's 10-year government bond yield rose to an 11-month peak of 0.10 percent. That gain is expected to test the Bank of Japan's resolve to keep the yield around zero percent.

Asian stocks were mixed, reflecting the differing fortunes for developed and emerging market economies faced with higher US interest rates.

"Emerging market countries have been hit the hardest by capital leaving in search of higher yields and return along with the growing cost of paying back dollar denominated debt," wrote Kathy Lien, managing director of FX strategy at BK Asset Management.

Japan's Nikkei climbed to a one-year high on a weaker yen and gains on Wall Street overnight. US shares rose on Thursday, brushing off the initial shock of a more hawkish Fed, led by shares of banks seen as the benefactors of higher rates.

European stocks also rose, gaining 1 percent on Thursday as bank stocks increased.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped a fraction after falling 1.8 percent on Thursday. The broader emerging market stock index was down 1.6 percent.

Australian stocks shed 0.1 percent, while South Korea's Kospi also lost 0.1 percent.

In commodities, crude oil prices nudged higher. Negative pressures from a bullish dollar were offset after OPEC members told customers they would cut crude supplies.

source: news.abs-cbn.com

US bond yields, dollar gain, stocks fall after Fed hike

NEW York - Yields on shorter-dated Treasuries hit their highest levels in more than five years on Wednesday while the dollar rose to its highest against the yen in 10 months after the US Federal Reserve raised interest rates and signaled a faster pace of hikes in 2017.

Wall Street stocks ended a volatile session with their biggest percentage decline since before the Nov. 8 US presidential election, while gold prices hit a 10-month low.

As expected, the Fed raised the target federal funds rate 25 basis points to between 0.50 percent and 0.75 percent. It was its first rate hike in a year and its second since the financial crisis.

Central bank policymakers also shifted their outlook to one of slightly faster growth, with President-elect Donald Trump planning a simultaneous round of tax cuts and increased spending on infrastructure. The Fed now sees three rate hikes in 2017 instead of the two foreseen in September.

"It was largely as expected, but it's pretty clear the market is taking it as a bit more aggressive or hawkish than it had thought," said Ed Keon, portfolio manager and managing director at QMA, a multi-asset manager wholly owned by Prudential Financial in Newark.

Yields on two-year Treasury notes rose to their highest level since August 2009, while three-year yields hit their highest since May 2010 and five-year yields rose to their highest since May 2011.

US two-year Treasury notes were last down 4/32 in price to yield 1.238 percent, an increase of more than 8 basis points from its late Tuesday levels.

The dollar rallied about 1.3 percent against the yen to 116.71 yen, its highest since Feb. 8, while the dollar index , which measures the greenback against a basket of six major currencies, hit a nearly three-week high of 101.960 and was last up 0.8 percent at 101.86.

The dollar and bond yields were mostly trading lower before the Fed statement.

The Dow Jones industrial average fell 118.68 points, or 0.6 percent, to 19,792.53, while the S&P 500 lost 18.44 points, or 0.81 percent, to 2,253.28, its biggest daily percentage drop since Oct. 11.

The Nasdaq Composite dropped 27.16 points, or 0.5 percent, to 5,436.67.

US stocks traded both sides of unchanged just after the statement but began adding to losses during Fed Chair Janet Yellen's subequent news conference.

With US stocks, "we've had a great run, so it's tempting maybe to take a little bit off the table," Keon said. Stocks have rallied since the election on bets of higher US economic growth.

The S&P utilities index, which tends to fall as bond yields rise, fell 2 percent and led losses in the S&P 500, along with the energy index, which fell 2.1 percent.

MSCI's all-country world stock index was down 0.6 percent. The pan-European STOXX 600 share index ended down 0.5 percent.

"All elements we've received so far from the Fed, including the policy statement, the forecasts, the dot plot, tilt hawkish. They imply that the Fed sees more room to run with interest rates higher given the Trump election," said Frances Donald, senior economist at Manulife Asset Management in Boston.

In contrast to the Fed, the European Central Bank only last week extended its asset-buying campaign and moved to purchase more short-term debt.

GOLD, OIL LOWER

Gold turned lower and tapped the lowest in more than 10 months following the Fed statement, while oil prices fell with the dollar's gain.

Spot gold was down 0.3 percent at $1,154.62 an ounce.

Brent crude futures settled at $53.90 per barrel, down $1.82, or 3.27 percent. US crude ended the session down $1.94, or 3.66 percent at $51.04 per barrel.

source: news.abs-cbn.com

Fed set to hike rates, policy outlook now hinges on Trump presidency

WASHINGTON - The Federal Reserve will conclude its two-day policy meeting on Wednesday afternoon with an interest rate increase all but assured and will issue new forecasts assessing whether the economic outlook has changed since the U.S. election.

The latest policy statement and projections are to be released at 2 p.m. EST (1900 GMT) with a press conference by Fed Chair Janet Yellen following at 2:30 p.m.

Markets are poised for the federal funds rate to rise to a target range of between 0.5 and 0.75 percent from the current range of 0.25-0.5 percent, where they have rested since the Fed approved its last rate increase a year ago.

Of more significance is the backdrop of the meeting. After years of the Fed fretting about low interest rates and weak inflation, the weeks since Donald Trump's victory have seen both bond yields and inflation expectations start to rise. The Dow Jones industrial average is up more than 11 percent since the vote.

Details of policymakers' new economic assessments, the first since the election, will be dissected closely to see if policymakers yet feel the arrival of the Trump administration has shifted the economic outlook or poses a risk of greater inflation. The president-elect has said he wants a major tax cut and infrastructure spending program, even as the economy approaches full employment and wages are rising.

"Inflation risks are more significant than they were three months ago," when the policymakers issued their last forecasts, sad Northern Trust chief economist Carl Tannenbaum. "Rates could well rise more than anticipated."

Despite the changed circumstances, it is not certain the Fed will budge on its assessments. The median forecast of policymakers as of September was for two interest rate increases in 2017, an outlook Tannenbaum and many analysts feel may remain the case.

Trump has not yet taken office, and any proposals would have to clear a Republican-controlled Congress that may be stricter about increasing public debt than Trump. In recent public appearances some Fed officials have said they see a chance Trump's policies may force them to speed the pace of rate increases, yet also said they are hesitant to change their outlook before he shares more details.

"Investors who are looking for clarity may be disappointed," said David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management.

source: news.abs-cbn.com

Fed turns to Trump agenda with rate hike nearly in the bag

WASHINGTON - The Federal Reserve inaugurates the Trump era this week with a near-certain interest rate increase and new economic forecasts providing a first glimpse into whether the U.S. election has reshaped the central bank's growth and inflation outlook.

Fed fund futures show a 97 percent probability that the Fed will lift rates by a quarter of a percentage point at the end of its two-day policy meeting on Wednesday, according to the CME Group.

All 120 economists in a Reuters poll expect a rate hike in the wake of a string of solid U.S. economic reports.

More telling will be whether the stock market rally and jump in bond yields triggered by Trump's Nov. 8 victory will push the Fed to an inflection point of its own and a higher projected pace of rate increases for 2017 and beyond.

The Republican businessman is inheriting a good economy, one that grew by 3.2 percent in the third quarter, the fastest pace in two years. There are, however, concerns that his plan to reduce taxes, cut regulation and increase infrastructure spending could not just boost the economy but also fuel higher inflation.

Since first published in 2012, the Fed's quarterly "dot plot" of projected interest rates has generally moved in one direction – down – and any post-election change will show whether policymakers expect Trump's policies to shake things up.

As of September, Fed officials' median projection was for two rate increases next year and a long run "neutral" level of 2.6 percent. A rate increase this week would be the first since last December and only the second since the 2007-2009 financial crisis.

"Their path is going to move up faster and a little sooner," said Steve Rick, chief economist for CUNA Mutual Group. He said the economy was running at its potential, and that was the Fed's cue to "exit stage right" and steadily move rates to normal.

Fed officials have long hoped that other government policies would take the place of monetary engineering, which some believe may have lost its effectiveness in lifting economic growth.

They have warned in recent weeks that any new government spending should specifically be designed to boost productivity in an economy that is already near full employment and facing a high public debt burden.

The Fed's new forecasts will indicate if policymakers feel that the monetary-to-fiscal handover is on the horizon, or need more time for the Trump administration's plans to become more detailed and move through Congress.

Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m. (1930 GMT) on Wednesday to elaborate on the economic outlook and policy statement.

She'll have a broad set of issues to cover since her last press conference in September - from the Federal Open Market Committee meeting itself, to the likelihood she will be replaced in early 2018 and the risks she foresees from the Trump agenda.

Trump repeatedly attacked Yellen during the election campaign, accusing her of holding down rates to help his Democratic rival. Since the election, he has expressed his disapproval of corporate America, criticizing Boeing, and took credit for a deal to keep hundreds of jobs at an Indiana plant from being moved to Mexico.

The president-elect also will be under scrutiny after this week's Fed meeting for clues about how he plans to handle his relationship with the central bank.

"There is a real risk that he could be openly critical of the decision to raise rates next week," Paul Ashworth, an economist with Capital Economics, said in a note last week.

That could upset markets and raise serious issues about whether Trump intends to leave the Fed alone or try to influence its decisions. Top U.S. elected officials, in particular the president, typically avoid criticizing the Fed's short-term rate decisions, emphasizing instead the need for monetary policy to be set independently.

"If he remains silent after the announcement to raise interest rates next Wednesday, then we can begin to assume that it will be business as usual for the Fed," Ashworth wrote.

WATCHING THE MARKETS

Trump's plan to cut taxes and regulation and funnel fresh billions into capital projects must pass Congress, and it may be well after that before any new programs meaningfully effect economic forecasts.

But policymakers also watch the markets closely. It may be hard for the Fed to stick with its ultra-slow pace of rate hikes if a major tax overhaul and fiscal spending plan are unleashed.

TD Securities analysts said that fiscal policy at this point in the economic recovery could prompt "an inflationary demand shock" that adds nearly a percentage point to economic growth, but spurs the Fed to raise rates much quicker than expected - by nearly an extra percentage point per year.

That scenario of a central bank caught behind the curve and forced to act faster is one that Yellen and other policymakers have said they hope to avoid out of fear it could prompt a recession.

Fed officials in recent days have acknowledged the Trump agenda may cause them to switch gears, though it is not clear how soon.

"At this juncture, it is premature to reach firm conclusions," New York Fed President William Dudley said last week.

But, since Trump won the election, Dudley added, "the stock market has firmed, bond yields have risen and the dollar has appreciated ... Market participants now anticipate that fiscal policy will turn more expansionary and that the (FOMC) will likely respond by tightening monetary policy a bit more quickly than previously anticipated."

source: news.abs-cbn.com

Federal Reserve closer to rate hike, but inflation doubts remain

WASHINGTON - Several voting Federal Reserve policymakers judged a rate hike would be warranted "relatively soon" if the US economy continued to strengthen but doubts on inflation remained, according to the minutes of the Fed's September policy meeting released on Wednesday.

The minutes of the Sept. 20-21 meeting, at which the US central bank held rates steady, also showed the depth of division over timing.

"Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as ... expected," the Fed said in the minutes.

Seventeen policymakers participated at the September meeting, of whom 10 had a vote. In the minutes, both voting members and the wider group were divided on how much more they can allow the labor market to strengthen before raising rates.

Some believe that with the United States already near full employment, inflation could rise too quickly if the Fed waits too long.

The minutes said "it was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation."

US stocks rose slightly following the release of the minutes, while yields on US government debt pared earlier gains.

"They just want a bit more data to be sure. We think they will have those data by the time of the December meeting," said Ian Shepherdson, an economist at Pantheon Macroeconomics.

Three voting members of the rate-setting committee dissented in the September policy statement in favor of an immediate hike, the first time since 2011 that so many have taken such action in the same direction at a single meeting.

In that policy statement, the Fed incorporated new phrasing saying it would maintain current interest rate levels for "the time being," widely seen as a hawkish signal.

According to the minutes, however, a few voters were concerned the inclusion of the phrase "might be misread as indicating that the passage of time rather than the accumulation of evidence" would drive future decision-making.

Although Fed policymakers disagree on whether the current 1.7 percent inflation rate is sufficiently close to their 2 percent objective, many voting members remarked that "there were few signs of emerging inflationary pressures."

Since the meeting, Chair Janet Yellen and several other Fed policymakers have said they expect a rate hike by year-end should the labor market and inflation continue to strengthen.

Almost all agree that after another rate hike, the path of interest rates will be much shallower than the Fed's last tightening cycle. At the September meeting, the Fed scaled back the number of rate hikes it expects next year, to two from three.

New York Fed President William Dudley said earlier on Wednesday the Fed could afford to be "gentle" in raising rates as the US economy has "plenty of room to run."

Last Friday's monthly jobs report for September showed that while employment gains are slowing, they are still well above the level required to offset population growth.

There are two more meetings scheduled this year, on Nov. 1-2 and Dec. 13-14. Traders have all but ruled out a move at the November meeting, which takes place just a week before the US presidential election. They currently see about a 70 percent probability the Fed will raise rates in December, little changed from before the minutes, according to data from CME Group.

Yellen is scheduled to deliver a speech on Friday in Boston, which may offer insight into the Fed's latest thinking.

source: www.abs-cbnnews.com

Global markets: Wall Street gains; oil's rise fuels energy shares

NEW YORK - Major US stock indexes gained on Wednesday, boosted by financial shares amid encouraging economic data and by the energy sector as oil prices surged to June highs.

US Treasury yields also rose after data showed US services sector activity rebounded to an 11-month high in September, an encouraging sign for economic growth.

The Dow Jones industrial average rose 112.58 points, or 0.62 percent, to 18,281.03. The S&P 500 gained 9.24 points, or 0.43 percent, to 2,159.73 and the Nasdaq Composite added 26.36 points, or 0.5 percent, to 5,316.02.

"We're taking a little victory lap today after the surprisingly good economic data," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

US stocks had been pressured this week by concerns over Britain's exit from the European Union and expectations of a Federal Reserve interest rate increase in the coming months.

Chicago Fed President Charles Evans said he would be "fine" with raising US interest rates by year-end if U.S. economic data remained firm.

Traders see a 60-percent chance the Fed will hike at its December meeting, according to the CME FedWatch website. Financial shares, which tend to benefit in a rising rate environment, climbed 1.5 percent, while the energy sector gained 1.4 percent.

"People are certainly waiting for that inevitable interest rate rise by the Fed, but I think they're just not sure if that's a sign that things are better and earnings are likely to improve, or a reason for people to sell stocks because rates are rising," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

In Europe, bond yields jumped while the pan-European STOXX index fell 0.6 percent. Markets were rattled by the prospect of the region's central bank eventually winding down its bond-buying stimulus.

A Bloomberg article on Tuesday cited sources as saying the European Central Bank would probably wind down the monthly 80-billion euro ($90 billion) scheme gradually.

Italy's 10-year bond yield rose to 1.38 percent, its highest level since late June, according to Reuters data. Germany's 10-year Bund yield, the euro zone benchmark, rose more than 8 bps to hit zero for the first time in a fortnight .

"I am surprised at the reaction, but it's just this notion that the ECB may be discussing tapering one day that has upset the market," said ING rates strategist Benjamin Schroeder.

MSCI's gauge of stocks across the globe climbed 0.2 percent after two sessions of declines.

Oil prices rose to their highest since June after the fifth unexpected weekly drawdown in US crude inventories added to support on hopes that major producers will agree to cut output next month.

The US Energy Information Administration said crude stockpiles fell 3 million barrels last week, opposite of forecasts of analysts polled by Reuters for a build of 2.6 million barrels.

Benchmark Brent crude settled up 2 percent to $51.86 a barrel, while US West Texas Intermediate crude settled up 2.3 percent at $49.83 a barrel.

Benchmark US 10-year notes fell 11/32 in price to yield 1.72 percent, up from 1.68 percent late Tuesday.

The dollar was little changed against a basket of currencies as the encouraging services sector data offset a weaker-than-expected report on private-sector job growth.

Sterling rose 0.2 percent against the dollar, after dipping below $1.27 and hitting a three-decade low against the greenback during the session amid worries about Britain's EU exit.

source: www.abs-cbnnews.com

Global Markets: Shares rally, dollar sags on slow-motion Fed

SYDNEY - Asian shares look set to rise for a sixth straight session on Thursday after the Federal Reserve left U.S. rates unchanged and plotted a lower trajectory for future hikes, slugging the dollar and boosting commodity prices.

Traders expected stocks to at least match the 1.1 percent gain enjoyed by the S&P 500. MSCI's broadest index of Asia-Pacific shares outside Japan was seen testing its recent one-year peak.

While Tokyo was on holiday on Thursday, stocks were boosted on Wednesday by the Bank of Japan's shift to targetting a positive yield curve, a move that was considered bullish for banks, insurers and pension funds.

The U.S. Fed did highlight the risk of a hike in December, but the forward guidance on rates - known as the dot points - left investors feeling any tightening would be glacial at best.

Market pricing for a December move rose only a fraction to 59.3 percent, from 59.2 percent, according to CME Group's FedWatch program.

Richard Franulovich, an analyst at Westpac, noted that back in June the median dot showed five hikes to end-2017. Now it was down to just three. The estimate of the long run neutral rate had also fallen 12.5 basis points to 2.875 percent.

"We do not feel that the dollar has the wherewithal to make a more concerted run higher in the next few weeks," he added. "The FOMC is unlikely to deliver anything more than a very 'dovish' December hike."

The dollar was down at 100.40 yen, having lost 1.3 percent on Wednesday to touch a 3-1/2 week low of 100.30. The euro had popped up to $1.1190, while the dollar index stood at 95.499 after easing 0.5 percent from a more than six-week high of 96.333.

CENTRAL BANKS STILL TRYING

The yen had gained broadly after the BOJ's shift to yield curve control - already abbreviated by the market to "YCC" - left some unimpressed.

"Fundamentally, it did not amount to an easing of monetary policy, but merely offers policy tweaks at the margin and a strengthening of forward guidance," said Frederic Neumann, co-head of economic research at HSBC.

"The BOJ now essentially promises to purchase JGBs for even longer, until inflation exceeds, and not merely meets, its 2 percent inflation target."

Another central bank struggling with too-low inflation is the Reserve Bank of New Zealand and it renewed a pledge to lower rates again on Thursday even as much of the domestic economy is growing briskly.

The RBNZ's blunt statement that further easing would be needed knocked the local dollar down half a US cent to $0.734, but the market has found it hard to sell a currency that still offers an overnight interest rate of 2 percent.

In commodity markets, gold traded at $1,332.36 an ounce, having climbed 1.6 percent as the US dollar declined.

Oil prices had climbed as much as 3 percent on Wednesday after a third surprise weekly drop in US crude stockpiles boosted the demand outlook in the world's largest oil consumer.

Another supportive factor was an oil workers' strike in Norway, which threatened to cut North Sea crude output.

U.S. crude (WTI) futures were up another 29 cents early Thursday at $45.63 a barrel. Brent crude futures had finished $1.17 higher at $47.05 per barrel.

source: www.abs-cbnnews.com

Dollar, yen waver in narrow ranges ahead of Fed, BOJ meetings

TOKYO - The dollar and the yen fluttered in narrow ranges on Wednesday, penned in by uncertainty about the outcome of Bank of Japan and Federal Reserve policy meetings later in the session.

At the conclusion of its two-day meeting, the BOJ is expected to say it will make negative interest rates the centerpiece of a new policy framework.

The central bank might consider deepening negative rates to show its determination to maintain an ultra-easy policy bias, though whether to deploy one of its dwindling options so soon would be a close call, sources close to the BOJ have said.

"Bolder, more aggressive, action is needed to put a top in the yen and a bottom in USD/JPY but the chance of that happening is slim and we believe that at the end of the BOJ meeting, investors will be disappointed," Kathy Lien, managing director at BK Asset Management, said in a note.

Ministry of Finance data released earlier on Wednesday showed Japan's exports fell 9.6 percent in August from a year earlier, posting an 11th straight month of decline.

The dollar edged down 0.1 percent to 101.63 yen, treading water in this week's narrow range between Monday's high of 102.42 and this morning's low of 101.49.

The euro was flat at 113.38 yen after earlier touching 113.23, its lowest since Aug. 26. Against the dollar, the European unit was steady at $1.1152.

After the BOJ decision, investors' attention will quickly shift to the Fed. The U.S. central bank is widely expected to hold interest rates unchanged at 0.25 percent to 0.50 percent, and could hint at a rate hike by the end of the year.

Weaker-than-expected U.S. economic data has prompted investors to all but erase their bets that the Fed would raise rates on Wednesday.

On Tuesday, data showed US housing starts fell more than expected in August as building activity declined broadly after two straight months of solid increases.

The British pound steadied after tumbling in the previous session, extending its losses after head of Germany's Bundesbank warned on Monday that banks based in Britain could lose "passporting" access to EU markets after Britain's pending exit from the European Union.

Sterling was down slightly on the day at $1.2982 after skidding to $1.2947 on Tuesday, its lowest since Aug. 16.

source: www.abs-cbnnews.com

Rate hike case 'less compelling': Fed governor

WASHINGTON - The case for raising US interest rates remains less than convincing, given weak inflation and current under-employment levels, influential Federal Reserve Board Governor Lael Brainard said Monday.

The remarks come a week before US policymakers are due to review interest rate policy, with markets lingering in uncertainty as to whether the Fed will resume a course of rate hikes it had embarked on in December.

"To the extent that the effect on inflation of further gradual tightening in labor market conditions is likely to be moderate and gradual, the case to tighten policy preemptively is less compelling," Brainard said in remarks at the Chicago Council on Global Affairs.

Brainard has been a consistent voice for postponing increases in interest rates in favor of allowing job creation.

Her remarks stood in contrast to more hawkish members of the Federal Open Markets Committee who say they fear inflation and an overheating economy. The FOMC was divided in June on the timing of the next rate increase.

Earlier on Monday, Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said policymakers were due for a "lively discussion" when they meet next week, but he did not pronounce on likely actions by the Fed this year.

Brainard said the conventional link between inflation and unemployment had not held as labor markets had strengthened over the past four years.

"At a time when the unemployment rate has fallen from 8.2 percent to 4.9 percent, inflation has undershot our 2 percent target now for 51 straight months," she said.

She also said that the current unemployment rate had not budged despite recently despite steady job growth of an average of about 180,000 new positions per month, suggesting that labor markets still had significant slack.

International economic conditions also argued in favor of caution, said Brainard, noting that weak growth and low inflation in Europe and Japan as well as instability in China could impinge on the US economy.

"Recent experience suggests global financial markets are tightly integrated, such that disturbances emanating from Chinese or euro-area financial markets quickly spill over to US financial markets," she said.

On Friday US equity markets lost more than two percent in reaction to more hawkish remarks from Boston Fed President Eric Rosengren.

However, stocks did not appear directly influenced by Brainard's remarks on Monday. Toward 1800 GMT, while the S&P 500 was up 0.9 percent.

source: www.abs-cbnnews.com

Fed rate hike unlikely this month, analyst says

MANILA - The US Federal Reserve is unlikely to raise interest rates in its next policy meeting on September 21, an analyst said Monday.

"There is still no consensus that they will raise interest rates come September 21, but the mere prospect of higher interest rates seems to be spooking the markets," Nicky Franco, head of research at Abacus Securities, told ANC's "Market Edge with Cathy Yang."

Strong job growth in August, however, is one of the factors that may push the Federal Reserve to increase interest rates this year, Franco said.

The banking sector is seen to gain from higher interest rates, he added.

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Most Asia stocks slide on Fed officials' rate comments, dollar firms

SINGAPORE - Most Asian share markets tumbled on Monday while the U.S. dollar added to gains made after Federal Reserve Chair Janet Yellen indicated a U.S. interest rate increase remains on the cards for this year.

European markets also looked set for a weak start, with financial spread betters expecting Germany's DAX to open down 0.7 percent, and the blue-chip Euro Stoxx 50 to begin the day 0.6 percent lower. British markets are closed for a holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan extended losses to 1 percent.

Japan's Nikkei bucked the trend, closing 2.3 percent higher, the biggest one-day gain in three weeks, as the yen weakened against the resurgent dollar.

China's CSI 300 index and the Shanghai Composite slipped 0.2 percent. Hong Kong's Hang Seng shed 0.4 percent.

The case for a U.S. rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth looks likely to continue at a moderate pace, Yellen said in a speech at the Fed's annual monetary policy conference in Jackson Hole, Wyoming, on Friday.

While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as "solid" but noted that U.S. business investment was weak and exports hurt by a strong dollar.

Comments by the Fed's No. 2 policymaker, Vice Chair Stanley Fischer, following Yellen's speech also bolstered the case for a hike this year.

Asked on CNBC whether a rate hike in September and more than one policy tightening before year-end should be expected, Fischer said Yellen's comments were "consistent with answering yes" to both questions, albeit still data-dependent.

Among the first data to be scrutinized will be U.S. consumer confidence for August, due on Tuesday; productivity, manufacturing and construction figures on Thursday; and August non-farm payrolls data rounding out the week on Friday.

Global factory activity surveys will also be released on Thursday.

Traders have modestly raised expectations for U.S. rate increases this year, but remain cautious.

The odds of a hike in September rose to 33 percent following the comments, from 21 percent on Thursday, according to CME Group's FedWatch tool. Traders were pricing in a 59.1 percent chance of a hike in December, up from 51.8 percent on Thursday.

"While the move toward another Fed rate hike will likely cause bouts of consternation in investment markets I don’t see the same degree of uncertainty that we saw around last year’s Fed rate hike," Shane Oliver, head of investment strategy at AMP Capital in Sydney, wrote in a note.

"It's clear from the Fed's actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the U.S. economy and of the impact of a rising U.S. dollar in doing some of its work for it."

The comments from Yellen and Fischer dragged Wall Street lower at the close.

But they proved a boon for the U.S. currency, with the dollar index, which tracks the greenback against six global peers, jumping 0.8 percent on Friday. It held steady at 95.552 on Monday.

The dollar rose 0.5 percent to a two-week high of 102.34 yen on Monday. That followed gains of 1.3 percent on Friday, its biggest one-day advance in almost seven weeks.

Japanese household spending and retail sales data for July are due on Tuesday. Investors are seeking some sign that Prime Minister Shinzo Abe's massive stimulus programs are having an effect, after figures on Friday showed a decline in consumer prices by the most in three years in July.

The euro was flat at $1.120 after tumbling 0.8 percent on Friday, its biggest one-day slide since July 15.

In commodities, crude prices retreated on the rally in the dollar and concerns about growing output after exports from Iraq in August exceeded July levels.

Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran's right to regain market share lost during international sanctions that were only lifted in January.

U.S. crude futures dropped 1.5 percent to $46.95.

Global benchmark Brent crude retreated 1.2 percent to $49.31.

The stronger dollar also weighed on gold. Spot gold slipped 0.2 percent to $1,318.10, after earlier touching a five-week low.

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Fed hike worries seen to drag on trading

MANILA – Investors will likely remain on the sidelines on Wednesday, as they await first half economic growth data, with the prospect of an interest rate increase in the United States before the end of the year weighing on sentiment, an analyst said.

The Philippine Stock Exchange Index closed 0.29 percent higher to 7,983.38 on Tuesday. Asian shares stepped back from a one-year high on Wednesday after the Federal Reserve said a rate increase could come as soon as September.

“Its going to be a quiet day today, with light risk on the downside,” BPI Securities analyst Riche Lim told ANC’s “Market Edge with Cathy Yang.”

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Asian shares hover near 8-month peak on BoE rate cut hope

TOKYO/SINGAPORE - Asian shares remained near an eight-month high on Thursday as investors bet the Bank of England will cut rates to ward off recession following Britain's vote to leave the European Union.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent, hovering near the highest level since November it reached on Wednesday. Japan's Nikkei added 0.8 percent.

Chinese stocks, however, were lower, with the CSI 300 index slipping 0.3 percent and the Shanghai Composite down 0.4 percent. Hong Kong's Hang Seng was little changed.

U.S. stocks ticked up on Wednesday, just enough for the S&P 500 and Dow industrials to set record highs, with investors expecting upbeat earnings to keep the rally going.

Wall Street shares have quickly recovered the losses triggered by Britain's vote on June 23 to leave the European Union, driven by solid U.S. economic data.

"Brexit doesn't mean a breakdown of the global financial system after all, nor a major slowdown in the economies outside the UK," said Koichi Yoshikawa, executive director of finance at Standard Chartered Bank in Tokyo. "Investor activity is slowing down after June 24 but uncertainty is gradually easing."

In addition, concerns that Brexit could disrupt European economies effectively took a Federal Reserve rate hike off the agenda in the near future, and boosted expectations of more monetary stimulus from central banks in Europe and Japan.

Financial markets expect the Bank of England to announce a rate cut later on Thursday. Governor Mark Carney has hinted he may ease policy to cushion the economy from the Brexit shock.

The British pound advanced 0.3 percent to $1.3194 on Thursday. Sterling climbed to this week's high of $1.3340 on Wednesday as political uncertainty eased following the appointment of Theresa May as prime minister.

But it ended the day down 1.4 percent from that peak after May named leading Brexit supporters to key positions in her new government, including former London mayor Boris Johnson as foreign secretary, and attention shifted toward a possible rate cut by the Bank of England.

"The Brexit vote appears to be having a psychological effect as informal measures of consumer confidence have already fallen precipitously," David Lafferty, chief market strategist at Natixis Global Asset Management, wrote in a note.

"Having argued that Brexit may lead to recession, it may be difficult for (Carney) to justify postponing a rate cut."

The euro was stuck in its familiar range and last stood up 0.2 percent at $1.1108.

While the European Central Bank is expected to keep policy on hold at its meeting next week, the euro's overnight index swaps were pricing in further rate cuts over coming months.

The yen, which slid 3.9 percent over the first three days of this week, extended losses by 0.2 percent to 104.75 to the dollar.

Japanese Prime Minister Shinzo Abe called for fiscal stimulus, expected to reach about two percent of GDP, following his election victory on Sunday.

Oil prices bounced back after losses of over 4 percent on Wednesday that erased most of the previous session's gains, as a run of bearish U.S. inventory data heightened concerns about a global glut.

Global benchmark Brent crude futures gained 1.2 percent to $46.79 per barrel.

U.S. crude added 1 percent to $45.18.

The revival in risk appetite weighed on gold. Spot gold retreated 0.3 percent to $1,338.40 an ounce.

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Asian shares flat as China trade data weighs

SINGAPORE/TOKYO - Asian shares were flat on Wednesday, as weak Chinese export data offset a brightening energy sector outlook and an expected delay in interest rate hikes by the U.S. Federal Reserve.

The MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent, amid subdued risk appetite as markets braced for weak May trade data out of China due today.

Japan's Nikkei extended losses to trade 0.3 percent lower, weighed down by a stronger yen.

"Global equities are firmer, but it is not indicative of an uptake in risk appetite. The upmove was mostly driven by higher oil prices," Bernard Aw, market strategist at IG, wrote in a note. "Therefore, Asia may not see much of a risk-on session today, as market participants remain cautious."

Chinese shares also slipped, with the CSI 300 and the Shanghai Composite indices both down 0.7 percent. Hong Kong's Hang Seng slid 0.4 percent.

Chinese dollar-denominated exports declined 4.1 percent in May from a year earlier, compared with the expected drop of 3.6 percent. Imports fell 0.4 percent, less than the expected 6 percent. China's trade surplus is forecast to hit $50 billion in May.

On Wall Street, the U.S. S&P 500 Index rose 0.1 percent to 2,112, less than 20 points away from its record closing high marked in May last year.

The advance was led by 2.1 percent gains in energy shares as oil prices jumped more than 1 percent to hit 2016 highs on expectations of domestic stockpile draws and worries about supply shortfalls from attacks on Nigeria's oil industry.

A report by trade group American Petroleum Institute (API), released after Tuesday's close showed a crude draw of 3.6 million barrels, larger than expectations of 2.7 million barrels, supporting the market.

U.S. crude futures rose 0.1 percent to $50.43 per barrel, near its Tuesday high of $50.53, a level last seen in October.

Global benchmark Brent futures was little changed at $51.47, close to the eight-month high of $51.55 per barrel hit earlier in the session.

Investors further trimmed expectations of Fed rate hikes as they assessed Friday's employment report that showed new hires sharply dropped in May.

Data published on Tuesday confirmed U.S. nonfarm productivity fell in the first quarter on a surge in labor-related costs, suggesting companies may have had to slow hiring after their hiring earlier this year outpaced revenue growth.

"Output is not increasing as much as an increase in employment, hence we have a fall in productivity," said Shuji Shirota, head of macroeconomic strategy at HSBC Securities. "If employment stops increasing and we still have no growth in productivity, that would be a worrying sign."

The 10-year U.S. Treasuries yield was last at 1.7108, after falling back to 1.713 percent overnight, testing strong support at around 1.70 percent.

In Europe, German bond yields hit a record low of 0.045 percent on Tuesday as investors sought a safe haven ahead of Britain's referendum on EU membership.

The British pound was off Monday's three-week low but remained volatile. It traded at $1.4542, compared with Monday's low of $1.4352.

The dollar also licked its wounds near four-week lows after the job data quashed expectations of a Fed rate hike in the next couple of months.

The dollar index stood at 93.732, the lowest level in almost a month.

The euro gained 0.1 percent to $1.13690 while the yen rose 0.6 percent to 106.735 per dollar.

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Wall Street dips, Apple gain fails to offset rate worries

Wall Street ended lower on Monday as a bounce in Apple failed to offset concerns that the U.S. Federal Reserve could raise interest rates sooner than later.

The timing of future Fed rate hikes in the face of a sluggish economy is a major focus among stock investors who have benefited from historically low borrowing costs since the 2008 financial crisis.

The Dow Jones industrial average and the Nasdaq Composite traded higher for much of the session but they made a pronounced dip in the final few minutes.

San Francisco Fed President John Williams and his St. Louis counterpart, James Bullard, both struck hawkish tones in separate appearances on Monday.

Last week, investors were surprised at central bank minutes that opened the door to a rate hike as soon as June. Investors will listen for fresh clues to the Fed's intentions when Chair Janet Yellen speaks on Friday.

"The market needs to be coddled and gently eased into a slightly higher interest-rate environment, and that appears to be what the Fed is doing," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

"Rates need to normalize and the Fed needs to give itself room to lower again in the event of another financial crisis," Ghriskey said.

Apple rose 1.27 percent and the Philadelphia SE Semiconductors Index added 0.66 percent after Taiwan's Economic Daily News reported that Apple asked suppliers to build more of its next-generation iPhones than previously expected.

The Dow Jones industrial average declined 0.05 percent to end at 17,492.93 points and the S&P 500 lost 0.21 percent to 2,048.04.

The Nasdaq Composite dipped 0.08 percent to 4,765.78.

Just 5.9 billion shares changed hands on U.S. exchanges, well below the 7.2 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Eight of the 10 major S&P sectors ended lower, led down by a 0.97 percent dip in utilities.

The materials index rose 1.19 percent. It was boosted by Monsanto's 4.41-percent jump after the U.S. seeds company received a $62 billion takeover offer from German drugs and crop chemicals group Bayer.

The largest drag on the S&P 500 was Microsoft, down 1.17 percent.

Saturday was the one-year anniversary of the S&P 500's last record high close and the index is now down some 4 percent from that peak.

Tightening borrowing costs would help choke inflation but also hamper economic expansion and reduce liquidity in stock markets, which could impede stock gains.

The S&P 500 is trading at about 16.4 times expected earnings, down from about 17 at the start of May, according to Thomson Reuters Datastream.

Tribune Publishing fell 15.04 percent after it rejected Gannett's latest takeover offer. Gannett was down 2.36 percent.

Advancing issues outnumbered decliners on the NYSE by 1,521 to 1,479. On the Nasdaq, 1,489 issues rose and 1,329 fell.

The S&P 500 index showed six new 52-week highs and no new lows, while the Nasdaq recorded 46 new highs and 27 new lows.

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PH, Indonesian shares lead regional gains after Fed rate hike

BANGKOK - Most Southeast Asian stock markets gained on Thursday after the U.S. Federal Reserve raised interest rates as expected, with the Philippine key stock index rising nearly two percent and the Indonesian benchmark hitting a near two-week high.

The Philippines' key index rose 1.9 percent while the Jakarta composite index gained 1.2 percent, both hovering at their highest levels since Dec. 7.

Share price weakness in Southeast Asia this year in the wake of fund outflows has mostly reflected the rate hike fears, according to brokers.

"Markets have predictably declined heading into the first Fed hike. This, however, presents an opportunity as we expect Fed-related risks to subside thereafter," said broker Nomura Securities in a report.

"A combination of easing China risks and some domestic catalysts makes for a good opportunity to increase our risk exposure in ASEAN," Nomura said.

Nomura upgraded Indonesia to "overweight", the same as the Philippines and Singapore. It remained "underweight" on Malaysia and Thailand.

The Thai SET index rose marginally while telecoms shares such as Total Access Communication came under selling pressure on concerns the high bidding prices of 4G spectrum licences would hurt earnings.

The Fed hiked interest rates for the first time in nearly a decade on Wednesday, signalling faith that the U.S. economy had largely overcome the wounds of the 2007-2009 financial crisis.

The gains in Southeast Asia were in line with a rally on Wall Street overnight and in early Asian stock markets as investors chose to take the historic hike in U.S. interest rates as a mark of confidence in the world's largest economy.

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