Fed tapering, oil prices, interest rates

Employees wearing face masks work in the trading room at the headquarters of Daiwa Securities Group Inc. in Tokyo, Japan on Thursday, October 14, 2021.

Toru Hanai | Bloomberg via Getty Images

SINGAPORE – Asia-Pacific markets were mixed on Thursday as investors digested indications from the US Federal Reserve that its super-easy monetary policy since the start of the pandemic is drawing to a close.

In Australia, stocks struggled for gains. The benchmark ASX 200 was down 0.57%, as sectors such as energy and materials fell 1.33% and 0.53% respectively.

Japan’s Nikkei 225 jumped 1.63% while the Topix index was up 1.11%. In South Korea, the Kospi rose 0.37%.

Hong Kong’s Hang Seng Index slipped 0.75%. Mainland Chinese stocks rose: the Shanghai composite was up 0.2% while the Shenzhen component was slightly higher.

Thursday’s session in Asia follows overnight gains on Wall Street.

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In the United States, the Fed has said it will speed up cutting its monthly bond purchases – the central bank will buy $ 60 billion a month in bonds starting in January, up from $ 90 billion in December, and said she will likely continue this trajectory in the months to come.

Once that’s done, in late winter or early spring, the central bank expects to start raising interest rates. Projections released overnight indicate that Fed officials are forecasting up to three rate hikes in 2022, two the following year and two more in 2024.

“Markets apparently took the lead, as three hikes were about to roll into the meeting and expectations were high for an accelerated taper profile,” said Tapas Strickland, chief economics and markets at the National Australia Bank, in a first Thursday Note.

“We get the impression on this profile that the Fed could move as early as March 2022, although the Omicron variant is of course a key uncertainty, as is the taper profile that works in favor of the first rate hike in May 2022 and which is 90%, ”he added.

Currencies and oil

In the currency market, the The US dollar traded at 96.397 against a basket of its peers, down 0.12% from its previous close at 96.511.

The Japanese yen weakened to 114.15 against the dollar, after levels near 113.70 earlier in the week. The Australian dollar changed hands at $ 0.7172.

Oil prices rose during trading hours in Asia on Thursday, with US crude rising 1.35% to $ 71.83 a barrel and the global benchmark Brent adding 1% to $ 74.62.

CNBC’s Jeff Cox contributed to this report.

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Felix J. Dixon