Global Market Responds Positively Results FOMC minutes
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| APEC 2015 |
- Begin trading this morning, we reported Stocks closed up on trading
this morning with investors digested the results of the FOMC minutes
showed most members of the Fed approved a US rate hike in December.
- Dow Jones closed up 1.42 percent at 17,737.1, with the rise in Apple
shares. S & P 500 ended up 1.62 percent, at 2,083.58, with the
increase in all sectors, led by health care.
- The Nasdaq rose 1.79 percent, to 5,075.2, with shares of iShares Nasdaq Biotechnology ETF (IBB) rose 2.92 percent.
- Meanwhile, Asian stocks opened higher after the market reacted
positively to the results of the FOMC minutes which made possible rise
in US interest rates in December.
- This morning the Nikkei rose 1.05% at 19855.23, the Kospi rose 0.68% at 1976.30, observed ASX 200 was up 1.15% at 5192.00.
- Of the commodity markets, spot gold price of LLG at the end of
trading early this morning closed up 0.05 percent at 1,070.56 dollars
per troy ounce, after the market reacted to the minutes of the US
Federal Reserve meeting which gave mixed signals about the possibility
of a rate hike in December.
- While the price of oil futures for WTI December contract closed up
0.20%, to 40.75 dollars per barrel after the results of the FOMC minutes
showed the majority of the committee believes appropriate rate of
interest will rise in December, but also disputed evidence of the
long-term potential of the US economy may be weak.
- Of the foreign exchange market, the US Dollar was up against the
yen, after the release of the FOMC strengthen US rate hike in December.
EURUSD climbed 0:16%, at 1.0658. GBPUSD rose 12:15% at 1.5233. USDJPY
rose 12:15%, at 123.62.
- Of the Indonesian capital market, the Composite Stock Price Index at
the close of trading on Wednesday (18/11) corrected negative, edged
down 0.07% at 4497.91. JCI weakening weakness triggered exchanges Asia
currently dominated by the close of trading this afternoon weakening.
- The major indices such as the main area of the Hang Seng index in
Hong Kong stock exchange, the Kospi in South Korea exchange, the
Shanghai index in China exchanges natural attenuation. Similarly, when
the opening of European markets this afternoon decline.
- Weakening global stock market sentiment related to the persistence
of investor caution towards global geopolitical conditions after acts of
terror in Paris on Friday.
- Technically there is support for JCI to further trade, estimated to
be in the range of support 4649-4823 and 4847-4696 resistant. Stocks
that are interesting to observe today: SMGR, SCMA, BBCA and ADHI.
- Fed’s rate hike likely next year
- Several FOMC members raised nonstandard reasons for rate hike in
December. Analysts suspect pushing the hike into 2016 may increase
uncertainty in financial markets.
- Members are also seemed to differ over the possibility of inflation
level returning to the target level of 2%, and they assume the
performance of labor market is not sustainable. They believe that the
PCE inflation will remain below 2% through the end of 2016.
- The ongoing global financial and economic developments also drew
FOMC's attention. Most of the participants argue the downside risks
arising from abroad seem to ease economy is secure now.
- "We believe that divisions within the committee and the soft path of
inflation we expect early next year will lead to a lower policy path in
2016 than the committee expects; we forecast it will hike only three
times in 2016", say Barclays.
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Fed Minutes Make a December Liftoff Look More Likely
The hawks are in and the doves are out. At least for the moment.
Warning about risks to the labor market, skeptical about the eventual rise of inflation and nervous about global growth, Federal Reserve policy makers who are keen to delay an interest rate hike found themselves out of step with a majority of their colleagues at the Oct. 27-28 meeting of the Federal Open Market Committee, minutes released Wednesday in Washington showed.
“The doves lost,” said Diane Swonk, chief economist at Mesirow Financial Holdings Inc. in Chicago. And that defeat came, she added, before the release of a better-than-expected October jobs report that provided more evidence of an economy on solid ground.
- In the statement following their October meeting, Fed policy makers made it clear that an interest-rate increase would be considered at their “next meeting,” which is scheduled for Dec. 15-16. The unusually direct signal helped lift investor expectations that the Fed will raise its benchmark lending rate for the first time in almost a decade.
Most Participants
- The minutes revealed that “most participants” agreed the conditions that would trigger a rate increase “could well be met by the time of the next meeting” and “some” felt those conditions had already been met. That left “some others” arguing that it was “unlikely that the information available by the December meeting would warrant raising the target range for the federal funds rate.”
- The minority resistance showed up, as well, when the committee debated how to word their Oct. 28 policy statement and whether to include the explicit reference to the “next meeting.”
- While an unspecified number saw the language as ultimately leaving the committee’s policy options open, “a couple of members expressed concern that this wording change could be misinterpreted as signaling too strongly the expectation that the target range for the federal funds rate would be increased at the committee’s next meeting.”
Gang of Three
- Laura Rosner, U.S. economist at BNP Paribas in New York said the hold-out doves were probably governors Lael Brainard and Daniel Tarullo, along with Chicago Fed President Charles Evans.
- "It seems like Yellen is not in that group,” she said, referring to Chair Janet Yellen.
- Brainard gave a speech in October outlining her case for delaying a rate rise, saying the potential damage caused by moving too soon would be harder to fix than the harm that might come from moving too late. Evans and Tarullo have argued against raising rates this year.
- “On risk management, it’s really Brainard leading this camp,” Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York, said. “You could really feel, between the lines, the undertow from Brainard” in the minutes.
- It was likely the same group -- variously identified as “a couple,” “a few,” or “some” -- that pointed to a decline in market-based measures of inflation expectations, argued that “downside risks from abroad were still significant” and worried aloud over the weak employment reports in August and September.
Optimists Prevail
- In each case, more optimistic views carried the day. The center of the committee stuck with the view that inflation would likely return to the Fed’s 2 percent target over the medium-term and concluded that global risks had significantly faded since concerns over China roiled financial markets in August.
- Many members had doubts about employment, but those will have been assuaged by the October payrolls report, when employers added 271,000 new jobs, the largest monthly gain all year.
- While he didn’t get his way in persuading the Fed to hike in October -- which led him to dissent for the second meeting in a row -- Richmond Fed President Jeffrey Lacker finds himself lining up with the FOMC consensus heading into December.
- “He’s been waiting there long enough and its coming to him,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.
- Feroli stressed, however, the shift on the committee reflects how the economy has evolved over time, and doesn’t signal any deeper change in the philosophies of FOMC members that will put the hawks in control of policy.
- “Just because they get one hike doesn’t mean they’re going to feel like they’re winning all of next year,” he said.
- Indeed, the minutes reveal repeated agreement across the committee that the Fed should proceed cautiously after liftoff.
- “Participants generally agreed that it would probably be appropriate to remove policy accommodation gradually,” the minutes said.
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Exchange Asia Stronger, Expect The Fed's decision would then Gradual
Asian stock markets on Thursday opened higher this morning following the Wall Street by investors' expectations that the Federal Reserve is quite confident about the American economy to raise interest rates in December, but will be very careful in further monetary tightening.
Markets interpreted that periods of rising interest rates that will come will be executed in stages.
The possibility of higher interest rates in the United States, the first in almost a decade, has made the mighty US dollar and the price of some commodities under pressure.
- Meanwhile, global investors are also looking forward to this treatise policy of the Bank of Japan (BOJ) and of the European Central Bank (ECB). Japan's Nikkei Stock .N225 observed to climb 1 percent, ignoring Japan's export data were disappointing.
- The MSCI index monitored rose about 0.6 percent, and the index looks AXJO Australia soared 1.1 percent.
- Elsewhere, the Hang Seng steady at the level of 22 465, or an increase of about 1.3 percent. JCI also this morning strengthened in position 4523 of the position before the market closed in 4497.
- Results of the minutes of the last Fed policy suggests that its members are ready to support the increase in December along the next decision will be based on the condition of the American economy continues to perform well.
- "If they raise rates in December, the Fed is likely to aggressively demonstrate the idea of a very gradual rise," said Tom Porcelli, chief US economist at RBC Capital Markets. "We hope that Yellen would stress this in his press conference later," she said to Reuters.
- Analyst ZATco Research Center see that market confidence in the Fed will raise interest rates gradually, which means that in a very careful and not aggressive, has been providing market certainty and confidence.
- That the interest rate should be increased, it has to be accepted by all market participants, because this is a "normalization" of interest rate policy era of "ultra low". With an indication of further rises gradually, the market thus need not be too worried with the shocks that may arise from the Fed decision.
- Analyst ZATco Research Center before it has been predicted that the Fed's actions will then be a gradual and carefully (see: The Fed Will Raise Interest Rates; how to react , The era of the US monetary tightening cycle from 2004 to 2006 were quite aggressive, with interest rates climbed from 1% to 5.25%, the 17-time decisions rose in a row, is unlikely to happen in the leadership of this Yellen. It gives hope and optimism.
- Then, in December when there is an increase in interest rates by the Fed, not necessarily Asian stock markets will be eroded sharply as many feared during this time. Really Time will test it.
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Inspiration Wall Street Strengthens Opening Hang Seng Index
The opening of trading on the Hong Kong stock exchange on Thursday (19/11), the Hang Seng index opened positive 1.50%, observed today still gained 266.06 points, down 1.20% at 22454.32. Positive results inspired a stronger Wall Street at the close of trading this morning.
- Stock Market Wall Street closed higher on trading this morning with investors digested the results of the FOMC minutes showed most members of the Fed approved a US rate hike in December.
- Dow Jones closed up 1.42 percent, the S & P 500 ended up 1.62 percent, the Nasdaq rose 1.79 percent.
- This morning stocks that became the backbone of the Hang Seng index is stock Belle International Holdings Ltd that rose by 3.9%, Sino Land Co Ltd shares rose 2.79%, the stock Wharf Holdings Ltd. / The rose 2.74%, shares of Cathay Pacific Airways Ltd. rose 2.46%, shares of China Resources Power Holdings Co Ltd rose 2.20%.
- While the movement of the Hang Seng index futures this morning observed increased 310 points or 1.40% at 22,447.00, up from the previous closing at 22,137.00.
- For further trade, there is still no indicator data that will be released, but worth noting Hong Kong's own domestic economic conditions are also moving global markets and commodity prices.
Analyst ZATco Research Center estimates that the movement of the Hang Seng Index to move sideways today will tend to strengthen limited to responding to the strengthening of global stock markets. Index is expected to move in the range of 21841-21462 Support and Resistance range from 22,690 to 23,031.
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2 Private Institutions Economic Survey of Australia Improved
Asutralia RBA outlook on the economy growing so that no change in the benchmark rate is evidenced by the survey two different private institutions, namely the Conference Board and the Westpac Bank.
Both the agency today released leading economic index which indicates a positive movement of the instruments that sustain the economic growth of the country.
- According to the Conference Board, an Australian leading economic index continued negative for 7 consecutive months successfully reduced in September with the index contracted 0.1 percent. Previous index has dropped 0.4 percent in August.
- For indexes created by Westpac Bank today demonstrates the value that is unchanged for the month of October from the previous month at 0.1 percent to 97.7 index points.
- Among the individual components, the biggest support comes from household spending and net exports.
- The institution of the survey data, Australia's GDP is expected to rise 2.8 percent in 2016, higher than expectations of 2.3 percent of GDP this year.
- Australia Leading Economic Index Of the seven components that make up the leading index of the Conference Board's version, only 4 components of natural increase declined and the rest remained. The decline occurred in share prices and building approvals.
- Between March and September, the leading economic index fell 0.9 percent (annual rate of about -1.7 percent), the reversal of growth of 1.4 percent (about a 2.7 percent annual rate) during the previous six months.
- After the survey was released condition Aussie weakening exchange rate against the US dollar since the beginning of the Asian trading session unchanged at the end of trading session where the pair AUDUSD was down about 0.1 percent.
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Promising work in South Korea, Tens of Thousands Unemployment Decreases
Employment growth in South Korea in October compared with the previous year increased by much of the past 5 months, although in the many who quit his job.
Statistical Office of South Korea also announced unemployment in the country decreased slightly.
- On annual basis the number of people working in South Korea per month last October reached 26.298 million people, the number of natural increase of about 348,000 people from the same month last year. However, on a monthly basis for the month around 18,000 people stopped working.
- Besides South Korea's unemployment rate declined to 3.4 percent in October 2015 from 3.5 percent in September, or the number of unemployed decreased to around 913 000 33000 people unemployed.
- Unemployment has decreased for the fifth consecutive month and is based on the chart below the index value was the lowest this year.
- South Korea Unemployment Rate However, in annual terms unemployment rate fell to 3.1 percent in October from 3.2 percent in September, where the number of unemployed fell by 19,000.
- The unemployment rate was the lowest level since November 2013. The statistics also said the unemployment rate among young people fell 0.6 percentage points to 7.4 percent, which is the position of the youth unemployment rate lowest since May 2013.
- Meanwhile, according to OECD data, working people aged 15-64 rose 0.5 percent from a year earlier to 66.2 percent in October. As for young people aged 15-29 rose 1.1 percentage points to 41.7 percent.
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Stock Rally Australia and Japan Provide Encouragement opening Kospi Index
In early trading South Korean stock exchange on Thursday (19/11), positive opening Kospi Index rose 0.68% at 1976.30. JCI driven rally on the stock exchanges of Australia and Japan, as well as the positive Wall Street.
- While the development of stocks in the stock South Korea, Lotte Shopping shares rose 1.37 percent in early trading, although it emerged that the Korean Customs Service, which had previously refused duty-free license to Lotte, has given license to a competitor Lotte.
- Local department store giant Shinsegae granted a business license to open a duty-free shop in Myeong-dong district of Seoul according to the report.
- Shinsegae shares surged 7.37 percent at the opening. While stocks that became the backbone of the Kospi is Uni Chem shares are up 100%, Maniker shares rose 13.48%, shares rose 12.83 Iljin Materials, Dongseo Is shares rose 9.73%, shares rose 9 Samlip General Foods, 27%. As for the Kospi index futures also rose.
- Currently observed rise of 2.75 points or 1.14% at 242.30, where the previous closing is at 241.55. For today's trading there is no longer the direction of domestic fundamentals.
- Analyst ZATco Research Center estimates that the Kospi will move the data to respond to developments in oil prices and the development of global stock markets. The Kospi index is expected to move within the range of 238.33-235.28 Support and Resistance range 244.43-247.92
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US Dollar Asian Session 19 November Still Weak, Strong Rebound Potential
Minutes from the FOMC meeting late last month have been released before dawn depicting global readiness to plan the Fed will raise its benchmark interest rate and agreed upon by the majority of bankers who gathered last October.
- Post this release, the market is still comfortable with profit takingnya after the dollar exchange rate almost touched the highest level in seven months.
- And it continues to trade the Asian session this morning thus benefiting other major currencies. However, this action is expected to be completed when the European session given some good economic data released in Europe and also America tonight.
- The development is shown later in the day with the release of UK retail data sales are expected to decrease in the period from last October from the previous month.
- From the fundamental side Euro itself is still weak by the ECB plan that will ease monetary policy.
- From US itself tonight will be released weekly jobless claims data that ended last week and the data on manufacturing performance by the Philadelphia Fed, both the data are expected to show positive data so the potential to lift the dollar back.
- Monitor the strength of the US dollar exchange rate against other currencies on the US dollar index today (02:30:40 GMT) rolling in the range of 99.26, down from 99.54 opening at 0000 GMT.
- Technically, Analyst ZATco Resarch Center see the movement of the US dollar index is based on the high price at 99.82 and the low at 99.32 earlier today, the index is expected to have a resistance in the range of 100.12 and 99.82, while immediate support in the range of 99.26 and 99.00.
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Asian Stocks Gain With Oil as Dollar Falls on Dovish Fed Minutes
Stocks rallied across Asia after U.S. Federal Reserve meeting minutes reaffirmed policy makers’ faith in the world’s biggest economy and stressed the pace of any rate increases will be slow. The dollar fell, while precious metals and oil climbed.
A measure of regional equities gained 1.4 percent as of 12:35 p.m. in Tokyo after the Fed’s minutes spurred a surge in U.S. equities, with officials saying “it may well become appropriate” to raise rates in December and largely agreeing that the pace of tightening would be gradual. Japan’s currency rallied from a three-month low as the central bank made no change in its monetary policy as expected.
“The pace of the rise is what’s much more important than the rate rise itself,” said Angus Gluskie, a managing director who oversees $550 million at White Funds Management in Sydney. “If a rise occurs slowly then markets, investors and consumers all have time to respond to it and adjust accordingly. That’s the ideal circumstance and that’s certainly what the Fed is trying to achieve.”
- Asian stocks and currencies have slipped this year amid investor concern that the U.S. economy isn’t strong enough to withstand the first rate increase since 2006. Economic reports since the Fed refrained from a rate rise in October have been encouraging, with payrolls logging the biggest gain this year and unemployment falling to 5 percent. There’s a 66 percent probability that policy makers will move in December.
- Australia’s S&P/ASX 200 Index rose 1.4 percent, with materials shares leading gains. OzForex Group Ltd. surged 28 percent in Sydney after Western Union Co. offered as much as A$888 million ($632 million) in cash for the provider of online international payment services. Japan’s Topix index added 1 percent, Hong Kong’s Hang Seng Index gained 1.2 percent and the Kospi index climbed 0.9 percent in Seoul. Standard & Poor’s 500 Index futures advanced 0.1 percent after U.S. shares posted their biggest jump since October.
- Hong Kong’s Hang Seng China Enterprises Index advanced 1.2 percent, led by banks and industrial companies. China Construction Bank Corp. and China Railway Group Ltd. were the best performers in the H-shares gauge. The nation’s cabinet was cited by the Xinhua News Agency as saying the government will support targeted industries to upgrade their technology.
Currencies
- The Bloomberg Dollar Spot Index, a gauge of the currency against 10 peers, fell 0.4 percent, its first decline after a four-day advance. The euro gained 0.4 percent to $1.0697.
- “It’s become easier to take on risk with the Fed helping build the case for a December rate-hike as the consensus view, removing a level of uncertainty from the market,” said Yuji Saito, head of the foreign-exchange department at Credit Agricole SA in Tokyo.
- Asia-Pacific currencies clawed back some of their recent losses on Thursday, with New Zealand’s dollar climbing to 65.25 U.S. cents, the Aussie rising 0.6 percent, Korean won strengthening 0.7 percent and the ringgit gaining 0.8 percent.
- The yen gained 0.3 percent to 123.19 per dollar after touching 123.76 on Wednesday, the weakest since Aug. 20. Governor Haruhiko Kuroda, who unleashed unprecedented monetary stimulus at the Bank of Japan in 2013 and doubled down on it last year, is done expanding his efforts, according to an increasing number of economists. Forty-six percent of respondents in a Nov. 13-17 Bloomberg poll didn’t expect the BOJ to boost its current pace of asset purchases in coming months -- up from 33 percent in October. All 41 economists predicted no change at the BOJ’s policy meeting on Thursday.
vCommodities
Oil rallied from the lowest level in more than two months, gaining 0.5 percent to $40.96 per barrel in New York. U.S. inventories rose by 252,000 barrels last week, keeping supplies more than 100 million barrels above the five-year seasonal average, according to the Energy Information Administration. OPEC is confident the market will stabilize itself, Suhail Al Mazrouei, the energy minister of the United Arab Emirates, said in Dubai.
Palladium gained 1.1 percent, platinum rose 0.9 percent while gold rose 0.5 percent after tumbling to $1,064.55 an ounce on Wednesday, the lowest since February 2010.
“Gold is caught up in the narrative around Fed tightening, which the market has almost completely priced in right now,” said Jordan Eliseo, chief economist at trader Australian Bullion Co. in Sydney. Gold is due for a bounce after falling almost continuously since mid-October, he said.
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Police Fire Water Cannon on Protesters Near APEC in Manila
Police armed with riot shields fired water cannon and scuffled on Thursday with demonstrators in the Philippine capital, less than a kilometer from where Asia-Pacific leaders were meeting.
- Waving placards criticizing the Philippine government for its close ties to the U.S., hundreds of protesters shouted slogans against the Asia-Pacific Economic Cooperation forum as they were pushed back by the police.
- Parts of Manila have been brought to a virtual standstill amid tight security for APEC, with police taking extra measures after last Friday’s deadly terrorist attacks in Paris. Many roads -- usually clogged with traffic -- were blocked off and two days of public holidays declared to keep people away from the meeting areas, while hundreds of flights have been delayed or canceled.
- The Associated Press said there were about 1,000 protesters in the area, airing a grab bag of grievances.
- “We will use reasonable force if necessary,” police spokesman Wilben Mayor said Thursday at a briefing. The water cannon was not turned to a level intended to cause injury and was used to “cool down the emotions” of protesters. Police would exercise maximum tolerance although the gatherings were illegal as they lacked permits, he said.
- Several police were injured in the scuffles, Mayor said.
APEC Statement
- Police have said there’s no security threat to the APEC meeting. Several countries have heightened their alerts after the Islamic State attacks on Paris left at least 129 dead. APEC leaders plan to jointly condemn acts of terrorism and urge greater cooperation against militancy, according to a draft communique obtained by Bloomberg.
- The APEC gathering this week coincided with news that Muslim extremist group Abu Sayyaf had beheaded a Malaysian engineer being held hostage in the southern Philippines. Malaysia Prime Minister Najib Razak said he was “shocked and sickened” by the murder of Bernard Then and called on Philippine authorities to take action against the perpetrators.
- A four-decade Muslim insurgency in the southern province of Mindanao has left as many as 200,000 people dead. Militants in the region, including the Abu Sayyaf group, often take hostages for ransom.
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Push Oil Prices Rebound Rubber Price Tocom Up
Tocom rubber prices on Thursday morning (19/11) managed to increase. The price of natural rubber futures for the most active contract, namely April 2016 turned the rebound pushed crude oil prices. The increase in rubber prices rebound today pushed crude oil prices at the close of this morning.
WTI oil futures prices for December contract closed up 0.20%, to 40.75 dollars per barrel after the results of the FOMC minutes showed the majority of the committee believes appropriate rate of interest will rise in December, but also disputed evidence of the potential for long-term US economic might weak.
- The impact of the increase in crude oil prices make the cost of production of synthetic rubber which is made from crude oil becomes more expensive.
- As a result the demand for synthetic rubber down and raised the demand for natural rubber. Natural rubber price on Tocom for a most-active contract is for April 2016 contracts today opened at 158.4 yen per kilogram.
- The price of natural rubber futures rose by 0.4 yen to 157.9 yen per kilogram position, compared to the previous closing at 157.5 yen per kilogram.
- Analyst ZATco Research Center estimates that the price movement on a trading day Tocom rubber still potentially face negative pressure with sentiment still abundant supplies of crude oil supplies.
- IEA stating there are supplies 3 billion barrels of crude oil around the world is becoming weaker back pressure crude prices. Likewise, keep in mind the potential strengthening of the yen exchange rate.
- For today's trading session price is expected to meet with the support level at 153.00 yen positions.
- Next support at 148.00 yen. Meanwhile if the prices continue to strengthen the position will meet resistance at 163.00 yen and 168.00 yen.
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