Gulf bourses rise on FED’s rate cut stance
Most stock markets in the Gulf closed higher on Thursday, led by the Saudi index, joining a global rally as investors cheered the U.S. Federal Reserve’s indication that it will still deliver three rate cuts this year.
The Fed kept borrowing costs unchanged on Wednesday and signaled they still expect to ease interest rates by three-quarters of a percentage point by the end of 2024.
Most Gulf currencies are pegged to the dollar and any monetary policy change in the United States is usually mimicked by Saudi Arabia, the United Arab Emirates and Qatar.
Saudi Arabia’s benchmark index advanced 0.8 percent after previous session of losses, lifted by gains in finance and communications services sectors.
Asia shares on a roll
Asian stocks were near a weekly gain on Friday and the Nikkei charged to a record high, riding a rally from its global counterparts after a surprise rate cut from the Swiss National Bank had investors wagering who could be next.
The SNB’s 25 basis point rate cut on Thursday proved a shot in the arm for global risk sentiment as markets raced ahead to bet on big central banks lowering borrowing costs this year, sending Wall Street closing at record highs.
MSCI’s broadest index of Asia-Pacific shares outside Japan ran into some profit taking in early trade on Friday after jumping nearly 2 percent in the previous session, and was last 0.17 percent lower.
Still, the index was on track to gain more than 1 percent for the week. Other benchmarks in Asia also scaled new peaks, with Japan’s Nikkei and the Taiwan weighted index charging to record highs.
Both were on track for a weekly gain of nearly 6 percent and 3 percent, respectively. South Korea’s KOSPI similarly hit a two-year top.
Indian shares set to open higher
Indian shares are likely to open marginally higher on Friday after joining the global rally in the previous session as the US Federal Reserve stuck to its rate cut forecast, while other Asian peers opened lower after Thursday’s gains.
The Gift Nifty was trading at 22,060 as of 8:06 a.m. IST, indicating that the Nifty 50 will open above Thursday’s close of 22,011.95.
Asian markets opened lower, with the MSCI Asia ex-Japan dropping 0.9 percent, after adding 1.82 percent in the previous session.
Wall Street equities advanced overnight as the Fed-driven rally extended.
While the Fed maintained its outlook for 2024 rate cuts, the Swiss National Bank became the first major central bank to ease policy in this cycle.
Bank of England kept rates unchanged and said that the country is moving in the right direction for it to start cutting interest rates, aiding expectations of a near-term reversal in the global interest rate cycle.
Australian shares slip
Australian shares dipped on Friday, dragged down by heavyweight financials and miners, while investors refrained from placing big bets as a stronger-than-expected local jobs data fuelled worries around a possible delay in interest rate cuts.
The S&P/ASX 200 index was down 0.2 percent at 7,764.9 points by 1200 GMT.
Still, the benchmark index was on track for its best week since early February.
Data from the Australian Bureau of Statistics on Thursday showed that net employments sharply rebounded last month, compared with January levels – the biggest monthly gain in 10 months, barring distortions caused by pandemic.
Jobless rate in Australia dipped below analysts’ forecasts while markets cut interest rate cut bets by the central bank to 37 basis points for the year from 44 bps.
Japan’s nikkei hits record high
Japan’s Nikkei share average hit a record high on Friday, underpinned by the strength on Wall Street overnight and as a weaker yen prompted investors to buy automakers.
The Nikkei rose to as high as 41,087.75 earlier in the session, crossing the 41,000 level for the first time.
The index ended 0.07 percent higher at 40,844.53 by the midday break.
The Nikkei is on course for its fourth straight session of gains and, at current levels, is poised to jump 5.5 percent this week. The broader Topix rose 0.44 percent to 2,808.58.
“The market had expected the yen would strengthen against the dollar in this quarter but that is not happening, which is positive for Japanese firms,” said Shuji Hosoi, senior strategist at Daiwa Securities.
China stocks dip as rebound fades
China stocks slipped on Thursday, signalling a potential fatigue in their six-week rebound, while Hong Kong shares tracked regional markets higher after the US Federal Reserve pledged to stick to its rate cut plans.
Overnight, the Fed maintained its rates forecast between 5.25 percent and 5.5 percent, as expected, while nudging up the inflation forecasts. The median projection of policymakers for three 25-basis-point rate cuts this year remained unchanged from December. At the midday break, the Shanghai Composite index was down 0.2 percent at 3,073.37 points.
China’s blue-chip CSI300 index was down 0.17 percent, with the healthcare sub-index falling 0.58 percent. However, the financial sector sub-index rose 0.5 percent, while consumer staples sector logged a marginal 0.04 percent increase. Meanwhile, real estate outpaced the others with a 1.1 percent increase. Chinese H-shares listed in Hong Kong rose 1.56 percent to 5,894.3, while the Hang Seng Index was up 1.75 percent at 16,832.49.
Hong Kong stocks surge out of the gates
Hong Kong stocks jumped at the open Thursday as world markets were boosted by Federal Reserve interest rate projections that foresaw three cuts this year, despite still-sticky inflation.
The Hang Seng Index rallied 1.33 percent, or 219.76 points, to 16,762.83.
The Shanghai Composite Index gained 0.15 percent, or 4.73 points, to 3,084.41, while the Shenzhen Composite Index on China’s second exchange added 0.38 percent, or 6.86 points, to 1,813.46.