Asian shares climb, wager all on dovish Fed, trade hopes revive

Asian shares hit five-week highs on Wednesday as investors hoped the Federal Reserve would follow the lead of the European Central Bank and open the door to future rate cuts at its policy meeting later in the day.

 Asian shares

All eyes are now upon the Fed which is scheduled to release a statement at 1800 GMT on Wednesday, followed by a press conference by Chairman Jerome Powell shortly after.

  • MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.5% to a five-week top.
  • Shanghai blue chips firmed 1.7% to a six-week peak.
  • Japan’s Nikkei rose 1.6%, while Australia added 1% to its highest in 11 years.
  • E-Mini futures for the S&P 500 were a fraction firmer after a upbeat Wall Street session.
  • The Dow ended Tuesday with gains of 1.35%, while the S&P 500 rose 0.97% and the Nasdaq 1.39%. The S&P 500 has surged 6% so far this month to be 1% from the all-time high hit in early May.

Currency

The fallout in currencies was significantly less, in large part because it was hard for one to gain when all the major central banks were under pressure to ease.

  • The euro did pull back a bit after Draghi’s comments, but at $1.1192 was still well within the recent trading range of $1.1106-$1.1347.
  • The dollar remained sidelined against the yen at 108.49, and a shade firmer on a basket of currencies at 97.657.
  • The yuan picked up to 6.905 to the dollar on the trade news.

Bonds

  • Yields on the U.S. 10-year note reached the lowest since September 2017 at 2.016%, a world away from the 3.25% top touched in November last year.

Commodities

  • In commodity markets, the rate-cut buzz kept gold near 14-month highs at $1,344.20 per ounce.
  • Brent crude futures were off 6 cents at $62.06.
  • U.S. crude firmed 3 cents to $53.93 a barrel.

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