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Asian markets buoyed by Fed decision to hold rates – live! Asian markets buoyed by Fed decision to hold rates – live!
(35 minutes later)
7.13am BST07:13
7.07am BST07:07
Back in Asia, the Nikkei is still in the doldrums while the other major bourses perform pretty well on the prospect of cheaper money.
But in Japan a delay in the US hike has served to strengthen the yen, which is bad for exports and for stock markets.
Only a weakening yen will bring relief to the Nikkei according to Capital Economics’ Julian Jessop, who said in a note:
The single most important driver of equity performance in the next year or so is likely to be renewed weakness in the yen.
He sees the prospect of more QE from the Bank of Japan and a rate hike by the Fed as the two main factors to that situation around.
Updated at 7.07am BST
6.41am BST06:41
IG seeing European markets opening down, but only slightly.
6.26am BST06:266.26am BST06:26
China selloff was a 'necessary correction' – French finance ministerChina selloff was a 'necessary correction' – French finance minister
The French finance minister, Michel Sapin, is in Beijing and he’s being polite about the state of the Chinese economy.The French finance minister, Michel Sapin, is in Beijing and he’s being polite about the state of the Chinese economy.
It’s a real concern for a lot of people, including America’s finest economic brains. But Sapin said he sees no particularly significant risk from recent stock market turbulence and the recent fall was a “necessary correction”, Reuters reports.It’s a real concern for a lot of people, including America’s finest economic brains. But Sapin said he sees no particularly significant risk from recent stock market turbulence and the recent fall was a “necessary correction”, Reuters reports.
Updated at 6.26am BSTUpdated at 6.26am BST
6.21am BST06:216.21am BST06:21
Opinion still mixed on whether the Fed move was the correct one.Opinion still mixed on whether the Fed move was the correct one.
6.12am BST06:126.12am BST06:12
Chris Weston from IG in Melbourne has delivered his verdict on the day’s events and his view is that the Fed was as dovish as it could possibly have been and would have gone for a rise if it had not been for the August turmoil in China.Chris Weston from IG in Melbourne has delivered his verdict on the day’s events and his view is that the Fed was as dovish as it could possibly have been and would have gone for a rise if it had not been for the August turmoil in China.
It seems logical the central bank would have raised rates if it weren’t for recent international developments, but they tried desperately to buy themselves flexibility.It seems logical the central bank would have raised rates if it weren’t for recent international developments, but they tried desperately to buy themselves flexibility.
And as he says in conclusion, it could get interesting in Europe today despite the fairly muted response in Asia:And as he says in conclusion, it could get interesting in Europe today despite the fairly muted response in Asia:
It promises to be a very interesting session in Europe and the US, as traders have time to really assess the Fed’s view and what it means for markets. As always, the first move might not be the right move and cooler heads should prevail.It promises to be a very interesting session in Europe and the US, as traders have time to really assess the Fed’s view and what it means for markets. As always, the first move might not be the right move and cooler heads should prevail.
Updated at 6.13am BSTUpdated at 6.13am BST
6.03am BST06:036.03am BST06:03
SummarySummary
Time for a quick recap on the day’s main news here in Asia Pacific:Time for a quick recap on the day’s main news here in Asia Pacific:
5.48am BST05:485.48am BST05:48
As dawn breaks over Europe this is a good time to see what’s happening with the futures markets.As dawn breaks over Europe this is a good time to see what’s happening with the futures markets.
And it looks like the main markets will be up with FTSE predicted to open up 0.32%, the DAX in Germany up 0.26% and the CAC in paris up 0.32%.And it looks like the main markets will be up with FTSE predicted to open up 0.32%, the DAX in Germany up 0.26% and the CAC in paris up 0.32%.
5.26am BST05:265.26am BST05:26
Looks like the jury is still well and truly out on whether China’s economy is going to have a hard or soft landing as it decends from the heights of double digit growth. One of the reasons the Fed gave for keeping on hold were “heightened concerns” about the global economy in the wake the sharp selloff on Chinese stock markets in August and whether that means China can keep driving global growth as it has helped to do since the GFC.Looks like the jury is still well and truly out on whether China’s economy is going to have a hard or soft landing as it decends from the heights of double digit growth. One of the reasons the Fed gave for keeping on hold were “heightened concerns” about the global economy in the wake the sharp selloff on Chinese stock markets in August and whether that means China can keep driving global growth as it has helped to do since the GFC.
Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns.Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns.
If you want to see her full press conference, here it is:If you want to see her full press conference, here it is:
5.14am BST05:145.14am BST05:14
Chinese house prices riseChinese house prices rise
Today’s most interesting data comes from China where home prices inched upwards for a fourth consecutive month in August.Today’s most interesting data comes from China where home prices inched upwards for a fourth consecutive month in August.
Average new home prices inched up 0.3% in August from the previous month, according to Reuters calculations based on data released by the national statistics bureau on Friday, the same pace as in July.Average new home prices inched up 0.3% in August from the previous month, according to Reuters calculations based on data released by the national statistics bureau on Friday, the same pace as in July.
But Reuters reported that the Chinese property market – source of many concerns about the health of the economy – would not be booming again any time soon.But Reuters reported that the Chinese property market – source of many concerns about the health of the economy – would not be booming again any time soon.
Analysts do not expect a full-blown turnaround any time soon, as a huge overhang of unsold homes discourages new construction and investment in all but the biggest cities.Analysts do not expect a full-blown turnaround any time soon, as a huge overhang of unsold homes discourages new construction and investment in all but the biggest cities.
5.04am BST05:045.04am BST05:04
Back to the markets then and the Japanese stock market has started up again after the lunch break. The Nikkei is still down though at 18,170, a fall of -1.4%.Back to the markets then and the Japanese stock market has started up again after the lunch break. The Nikkei is still down though at 18,170, a fall of -1.4%.
Elsewhere it seems reasonably calm. In fact you could say the S&P/ASX200 here in Australia is having a good day. It is standing at 5,189 points, a rise of 0.8% on the day.Elsewhere it seems reasonably calm. In fact you could say the S&P/ASX200 here in Australia is having a good day. It is standing at 5,189 points, a rise of 0.8% on the day.
The Shanghai Composite in China is up 0.4% at lunch.The Shanghai Composite in China is up 0.4% at lunch.
4.50am BST04:504.50am BST04:50
Stevens’ testimony before the House of Representatives economics committee was wide-ranging. he also spoke about how he thinks the Australian economy will weather the headwinds facing China which Janet Yellen is so concerned about.Stevens’ testimony before the House of Representatives economics committee was wide-ranging. he also spoke about how he thinks the Australian economy will weather the headwinds facing China which Janet Yellen is so concerned about.
Whether that financial volatility itself will serve further to dampen global growth prospects remains to be seen. Sometimes such events portend a wider set of economic events, but just as often, they don’t.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.Whether that financial volatility itself will serve further to dampen global growth prospects remains to be seen. Sometimes such events portend a wider set of economic events, but just as often, they don’t.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.
4.40am BST04:404.40am BST04:40
US Fed will raise rates before Christmas – RBA chiefUS Fed will raise rates before Christmas – RBA chief
Glenn Stevens, the governor of the Reserve Bank, has weighed into the debate today. Despite suggestions that the Fed might now not raise until 2016, he thinks it will raise rates before Christmas. That means either at its October meeting or in December.Glenn Stevens, the governor of the Reserve Bank, has weighed into the debate today. Despite suggestions that the Fed might now not raise until 2016, he thinks it will raise rates before Christmas. That means either at its October meeting or in December.
Speaking at a parliamentary hearing in Canberra, he said:Speaking at a parliamentary hearing in Canberra, he said:
I would still think an increase in the Fed funds rate is probably going to happen this year. The majority of FOMC [Federal Open Market Committee] members still think that they’re likely to start raising this year, there’s two meetings left.I would still think an increase in the Fed funds rate is probably going to happen this year. The majority of FOMC [Federal Open Market Committee] members still think that they’re likely to start raising this year, there’s two meetings left.
4.35am BST04:354.35am BST04:35
Australia can weather global turmoil – RBAAustralia can weather global turmoil – RBA
Glenn Stevens, the governor of the Reserve Bank of Australia, has been giving evidence today to a parliamentary committee. He has an optimistic view of the economy and thinks it can weather the headwinds threatening China and which are worrying Janet Yellen so much.Glenn Stevens, the governor of the Reserve Bank of Australia, has been giving evidence today to a parliamentary committee. He has an optimistic view of the economy and thinks it can weather the headwinds threatening China and which are worrying Janet Yellen so much.
Stevens told the House of Representatives economics committee in Canberra:Stevens told the House of Representatives economics committee in Canberra:
There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.There is still a pretty good chance that we will come out of this episode fairly well, and much better than we came out of previous episodes of this type.
In the period ahead if we can get the non-resources part of the economy to keep improving gradually, build some confidence ... then we’ll get the unemployment rate to come down.We ought be looking to get back into the fives over time, and given enough time I think we will, unless we’re hit by a bad shock somewhere [NB it’s currently 6.2%].In the period ahead if we can get the non-resources part of the economy to keep improving gradually, build some confidence ... then we’ll get the unemployment rate to come down.We ought be looking to get back into the fives over time, and given enough time I think we will, unless we’re hit by a bad shock somewhere [NB it’s currently 6.2%].
4.24am BST04:244.24am BST04:24
Nine years is a long time in global economics. Check out that gold price.Nine years is a long time in global economics. Check out that gold price.
4.21am BST04:214.21am BST04:21
As mentioned below, the Australian dollar has benefited from the expectation that US borrowing costs would stay on hold and rein in the long march of the greenback. As a result it has rallied around 2c in the past week or so since sinking to a new six-year low and this afternoon is buying US71.95c.As mentioned below, the Australian dollar has benefited from the expectation that US borrowing costs would stay on hold and rein in the long march of the greenback. As a result it has rallied around 2c in the past week or so since sinking to a new six-year low and this afternoon is buying US71.95c.
Early on Friday it spiked to US72.76c, its highest level since August 24.Early on Friday it spiked to US72.76c, its highest level since August 24.
Updated at 4.22am BSTUpdated at 4.22am BST
4.11am BST04:114.11am BST04:11
Here’s some more reaction.Here’s some more reaction.
4.03am BST04:034.03am BST04:03
It is not in doubt that the Fed intends to raise rates, but the question that has obsessed economists and investors for the past couple of years has always been the timing.It is not in doubt that the Fed intends to raise rates, but the question that has obsessed economists and investors for the past couple of years has always been the timing.
For Larry Elliott, the Guardian’s economics editor, Thursday night’s decision shows that the Fed has become ultra-cautious and does not want to risk hiking rates if it has to reduce them again because the recovery is not strong enough. You can read his full article here but this is the main thrust:For Larry Elliott, the Guardian’s economics editor, Thursday night’s decision shows that the Fed has become ultra-cautious and does not want to risk hiking rates if it has to reduce them again because the recovery is not strong enough. You can read his full article here but this is the main thrust:
This is the weakest recovery the world’s biggest economy has experienced in modern times and even now, more than six years after the trough of the recession, there are mixed signals. The Fed is not entirely convinced that it is party time for the US economy.The Fed is also weighing up the implications of a US interest rate increase on emerging markets, and in particular whether the prospect of higher US yields will intensify capital flows out of countries such as China and Brazil.So when will rates rise? When there is a further improvement in the jobs market and when the Fed is “reasonably confident” that inflation is on course to move back up to 2%. Not yet, in other words.This is the weakest recovery the world’s biggest economy has experienced in modern times and even now, more than six years after the trough of the recession, there are mixed signals. The Fed is not entirely convinced that it is party time for the US economy.The Fed is also weighing up the implications of a US interest rate increase on emerging markets, and in particular whether the prospect of higher US yields will intensify capital flows out of countries such as China and Brazil.So when will rates rise? When there is a further improvement in the jobs market and when the Fed is “reasonably confident” that inflation is on course to move back up to 2%. Not yet, in other words.
3.58am BST03:583.58am BST03:58
Markets-wise it has been a bit mixed. The expectation was for a hold so the semi-rally in stocks and currencies suchas the Australian dollar in recent days showed that the decision has been priced in.Markets-wise it has been a bit mixed. The expectation was for a hold so the semi-rally in stocks and currencies suchas the Australian dollar in recent days showed that the decision has been priced in.
However, there has still been a bit of action, notably in Japan where the Nikkei plunged on the opening before fighting back.However, there has still been a bit of action, notably in Japan where the Nikkei plunged on the opening before fighting back.
Here are the scores so far:Here are the scores so far:
3.35am BST03:353.35am BST03:35
Good afternoon/morning and welcome to the markets live blog following the Fed’s decision to keep rates near zero.Good afternoon/morning and welcome to the markets live blog following the Fed’s decision to keep rates near zero.
You can read how the action unfolded here as relayed by my colleagues Graeme Wearden and Jane Kasperkevic. But the main takeaway seems to be that the very dovish comments from Fed chair Janet Yellen suggests that she and her fellow committee members might wait until next year to increase borrowing costs.You can read how the action unfolded here as relayed by my colleagues Graeme Wearden and Jane Kasperkevic. But the main takeaway seems to be that the very dovish comments from Fed chair Janet Yellen suggests that she and her fellow committee members might wait until next year to increase borrowing costs.
here’s the verdict of the world’s biggest bond trading company, Pimco.here’s the verdict of the world’s biggest bond trading company, Pimco.