Good Articles to Share
Dollar towering, stocks cowering as Fed hikes higher
SYDNEY: The dollar surged to a fresh two-decade high against major peers and stocks fell on Thursday (Sept 22), after the US Federal Reserve (Fed) raised US interest rates and forecast more hikes ahead than investors had expected.
The euro sank to a 20-year low of US$0.9810, after Russia ordered the mobilisation of reserve troops in an escalation of the war in Ukraine.
S&P 500 futures were down 0.6% and the dollar was flying in early trade. The dollar index hit a 20-year high of 111.65 and the greenback's strength sent the Aussie, kiwi and Canadian dollars down to fresh multi-year lows.
Sterling hit US$1.1233, its lowest in 37 years. South Korea's won slid past the symbolic 1,400 per dollar mark for the first time since 2009. The Thai baht, ringgit, Singapore dollar and Swedish krona all made major new lows.
Japan's Nikkei fell 1%. Hang Seng futures were flat, though the Golden Dragon index of US-listed Chinese shares took a beating and fell 5.9% overnight.
The Fed raised rates sharply, by 75 basis points (bps), on Wednesday, the third such rise in a row. That takes the bank's benchmark overnight rate target range to 3%-3.25%.
Projections showed officials think rates are going higher and growth is going lower, and the median forecast is for the funds rate to hit 4.4% this year, higher than markets had priced and 100 bps more than the Fed projected three months ago.
"The Fed is not going to stop any time soon, and there's going to be an extended period of restrictive monetary policy for at least the next year or so," said Sally Auld, the chief investment officer of wealth manager JB Were in Sydney.
"What else do you buy except for the US dollar at the moment?" she added, with growth clouds over Europe, Britain and China, and the yen tanking as Japan holds interest rates low.
The US yield curve deepened its inversion in a volatile session overnight as short-end Treasuries sold and the longer end rallied, as investors priced out the chance of a "soft" economic landing, and braced for damage to longer-run growth.
The two-year yield rose as high as 4.1230% and was last at 4.0848%, while the 10-year yield fell 6 bps to 3.5120%.
"The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive, or restrictive for longer," Fed chair Jerome Powell told reporters after the rate hike announcement.
Hikes ahead
Central bank meetings in Taiwan, Japan, the Philippines, Indonesia, Britain and Norway are due later in the day, with hikes expected everywhere but Japan.
Japan has this week driven home its commitment to ultra-dovish policy by spending more than ¥2 trillion (US$13.8 billion or RM63.24 billion) in the past two days to hold a 0.25% ceiling on the 10-year Japanese government bond yield.
However, even if no policy changes occur, there will be intense focus on governor Haruhiko Kuroda's views on the yen's precipitous slide, as growing discomfort could hint at policy changes and dovishness could unleash further yen selling.
The yen is down about 20% on the dollar this year and at 144.29 per dollar is near a 24-year low.
"We see risk of USD/JPY heading to 147 in the coming months," Rabobank strategist Jane Foley said in a note to clients.
The Australian and New Zealand dollars are pinned at their lowest since mid-2020, with the Aussie down 0.3% on Thursday to US$0.6611 and the kiwi down 0.4% to US$0.5831.
China's yuan is on the weaker side of seven per dollar. The US dollar index hit a 20-year peak of 111.63 in the wake of the Fed hike.
In commodity markets, oil slid on concern higher interest rates will crimp demand. US crude futures were steady in early Asia trade at US$82.81 a barrel. Brent futures were at US$89.83.
Wheat rose overnight on fears of a wider and deeper war in Ukraine.
- Reuters
More articles on Good Articles to Share
Croatian ruling party wins polls, prepares for talks on forming government
Created by Tan KW | Apr 18, 2024
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
New Update. Discover investment communities that resonate with your ideas
Apps
Top Articles
1
2
Good Articles to Share
Slower US Fed pivot weakens rate-cut bets across emerging Asia
3
Good Articles to Share
Bank of America CEO talks earnings, consumer spending, and inflation
4
Good Articles to Share
6
7
8
Kenanga Research & Investment
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
MQ Trading Signals
Stock
Time
Signal
Duration
Stock
Time
Signal
Duration
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
