Global Markets Update
- U.S. equity markets closed higher overnight, with all the Dow Jones, S&P 500 and NASDAQ gaining +1.0%, after the FOMC decided to maintain the target range for its benchmark policy rate at 0-0.25% and continue purchases of Treasuries and MBS at a pace of $120bn per month (however signaled scaling back asset purchases as soon as November and complete the process by mid-2022), and upgraded its economic forecasts with GDP growth seen at 3.8% in 2022 and 2.5% in 2023 (both higher than the prior projections) and unemployment at 3.8% in 2022 and 3.5% in 2023 (both unchanged from prior estimates).
- Long-dated U.S. treasury yields were mixed, with the 2-Yr yield higher at 0.240% and the 10-Yr yield lower at 1.306%.
- European markets. European equity markets closed higher overnight, with both the Stoxx Europe 600 and German DAX up +1.0% and U.K. FTSE 100 closing +1.5% higher, after ECB Governing Council member Madis Muller said the ECB will discuss boosting its regular asset purchases once the pandemic-era emergency stimulus comes to an end.
- Asian markets. Asian equity markets closed mixed overnight, with the Shanghai Composite up +0.4%, after PBOC injected 120bn yuan into the banking system through reverse purchase agreements, partly to prevent the liquidity crunch at Evergrande from reverberating across the financial markets. Nikkei 225 declined -0.7%, after BOJ kept its negative interest rate and asset-buying targets unchanged and trimmed its view of exports and production to reflect the hit to supply chains from the latest virus wave while keeping its overall view of the economy unchanged. The Hang Seng and KOSPI remained closed for a holiday.
- WTI oil is trading at US$71.96 a barrel. Iron ore price is at US$99.04 per ton. Spot gold is trading at US$1,767 per oz.
ASX Market Update
- ASX performance. The ASX 200 closed +0.32% higher yesterday. The RBA warned it may be necessary to clamp down on household debt-to-income levels as growing debt driven by booming property prices could increase the risk of financial instability.
- Insurance Australia Group Ltd (IAG) declined -3.0%, after an earthquake caused damage to buildings in Melbourne.
Today’s trading. In the U.S., PMI data is to be published