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Asian shares mixed after U.S. Fed lifts interest rate


Annabelle Liang, The Canadian Press</span>
Published Wednesday, September 26, 2018 11:57PM EDT

SINGAPORE -- Asian markets were mixed on Thursday after the U.S. Federal Reserve lifted its key interest rate as expected for the third time this year.

KEEPING SCORE: Japan's Nikkei 225 dropped 0.3 per cent to 23,952.30. South Korea's Kospi, which reopened after a national holiday, added 0.5 per cent to 2,349.99. Hong Kong's Hang Seng index slipped 0.4 per cent to 27,713.83. The Shanghai Composite Index lost 0.2 per cent to 2,802.18. Australia's S&P ASX 200 was less than 0.1 per cent lower at 6,189.70. Shares fell in the Philippines but rose in Taiwan, Singapore and Indonesia.

WALL STREET: Major U.S. indexes fell after the Fed pushed interest rates higher as expected. Stocks initially climbed after the announcement, but the gains faded as a drop in Treasury yields hurt financial stocks. The S&P 500 index dropped 0.3 per cent to 2,905.97 after being as much as 0.5 per cent higher earlier in the day. The Dow Jones Industrial Average fell 0.4 per cent to 26,385.28. The Nasdaq composite was 0.2 per cent lower at 7,990.37.

U.S. RAISES INTEREST RATE: On Wednesday, the Fed signalled its confidence in the U.S. economy by raising a key interest rate for a third time this year. It lifted its short-term rate -- a benchmark for many consumer and business loans -- by a modest quarter-point to a range of 2 per cent to 2.25 per cent. Hong Kong has adjusted its base interest rate to match the move, and other Asian economies which have their currencies pegged to the dollar may soon follow suit. Chairman Jerome Powell said this did not amount to a policy change. The Fed also forecasted another rate hike by end 2018 and predicted that it will continue to tighten credit into 2020 to manage growth and inflation.

ANALYST'S TAKE: "The Fed raised rates as expected but stopped referring to its policy as 'accommodative', which could signal that it is nearing the end of its tightening cycle," said Song Seng Wun, an economist at CIMB Private Banking. "While there are risks from trade fights, there is a sense of reassurance that growth remains resilient for now," he added.

ENERGY: Benchmark U.S. crude rose 88 cents to $72.45 per barrel in electronic trading on the New York Mercantile Exchange. The contract dropped 1 per cent on Wednesday to close at $71.57. Brent crude, used to price international oils, added 87 cents to $81.66 per barrel. It settled at $80.79 per barrel in London.

CURRENCIES: The dollar eased to 112.52 yen from 112.73 yen. The euro rose to $1.1752 from $1.1739.

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