Asian Shares Boosted by Fed Signals; Trump to Meet with Top Advisors over Tariffs

U.S. President Donald Trump is expected to meet with top trade advisors on Thursday to discuss planned December 15 tariffs on some $160 billion in Chinese goods, three sources familiar with the plans said, according to Reuters, as markets braced for potential negative impacts.
James Hyerczyk
Asian Stock Markets

The major Asian stock indexes traded mostly higher on Thursday after the U.S. Federal Reserve signaled yesterday it would not raise interest rates in 2020, and ahead of the U.K.’s second general election since the landmark vote to leave the European Union in 2016. The election promises to be pivotal for the fate of Brexit and the country’s economic policy.

Finally, according to Reuters, a high-stakes White House meeting is expected to take place Thursday to debate whether to impose additional tariffs on Chinese imports on December 15.

At 07:25 GMT, Japan’s Nikkei 225 Index is trading 23424.81, up 32.95 or +0.14%. Hong Kong’s Hang Seng Index is at 27000.96, up 355.53 or 1.33% and South Korea’s KOSPI Index is trading 2137.35, up 31.73 or 1.51%.

China’s Shanghai Index is at 2915.70, down 8.72 or -0.30% and Australia’s S&P/ASX 200 is trading 6708.80, down 43.80 or -0.65%.

Fed Keeps Rates Unchanged, Signals No Policy Change

The U.S. Federal Reserve kept interest rates unchanged on Wednesday, following three decreases in a row. The central bank also indicated it does not expect any policy changes through at least 2020.

Fed Chair Jerome Powell said in a news conference the central bank would have to see a persistent rise in inflation before hiking rates once again. The Fed had to cut rates multiple times this year to make up for raising rates too far at the end of 2018, a move that slowed the economy and caused stock prices to drop.

“In order to move rates up, I would want to see inflation that’s persistent and that’s significant,” Powell said. “A significant move up in inflation that’s also persistent before raising rates to address inflation concerns. That’s my view.”

Reuters:  White House to Debate US-China Tariffs

U.S. President Donald Trump is expected to meet with top trade advisors on Thursday to discuss planned December 15 tariffs on some $160 billion in Chinese goods, three sources familiar with the plans said, according to Reuters, as markets braced for potential negative impacts.

The report said officials circulated talking points downplaying the repercussions such a tariff hike would have on the U.S. economy ahead of Trump’s meeting with Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin, and White House advisers Larry Kudlow and Peter Navarro.

The senior advisors are expected to present divergent views during the high-stakes meeting, but the final decision will be up to Trump, the sources said.

Australian Shares Fall, Led by Financial Stocks

Australian shares fell on Thursday, led by financial stocks with Westpac Banking Corp falling more than 1 percent as its board faced intense scrutiny over a money-laundering scandal at the annual shareholder meeting.

Investors were cautious despite the U.S. Federal Reserve signaling that borrowing costs will not change anytime soon, as the economic outlook of the world’s top economy remains “favorable”.

Energy shares retreated 0.6 percent as a surprise climb in U.S. crude inventories hit oil prices and raised concerns over global demand outlook. Tech stocks declined 1.5 percent.

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