MARKETS AT A GLANCE
LAST CHANGE % CHG
DJIA 17356.9 288 1.69%
Nasdaq 4644.31 96.48 2.12%
S&P 500 2012.89 40.15 2.04%
Japan: Nikkei 225 16819.7 64.41 0.38%
Hang Seng 22585.8 -84.66 -0.37%
Shanghai Composite 3061.02 39.5 1.31%
S&P BSE Sensex 26710.1 -71.31 -0.27%
Australia: S&P/ASX 5161.9 9.6 0.19%
UK: FTSE 100 6336.48 4.65 0.07%
PRICE CHG YIELD%
U.S. 2 Year -4/32 0.617
U.S. 5 Year -14/32 1.61
U.S. 10 Year -22/32 2.139
Australia 10 Year -24/32 2.882
China 10 Year -5/32 3.8
India 10 Year 0/32 7.971
Japan 10 Year -2/32 0.363
German 10 Year 0/32 0.597
LAST(MID) CHANGE
Australia $ (AUD/USD) 0.8128 0.0005
Yen (USD/JPY) 118.73 0.1
S. Korean Won (USD/KRW) 1098.41 0.5
Chinese Yuan (USD/CNY) 6.1971 0.0021
Euro (EUR/USD) 1.2346 0.0002
WSJ Dollar Index 82.39 0.04
LAST CHANGE % CHG
Crude Oil 55.87 -0.07 -0.13%
Brent Crude 60.63 0.62 1.03%
Gold 1189.3 -5 -0.42%
(Data as of approximately 5 p.m. ET)
SNAPSHOT:
The Federal Reserve retained its pledge to keep interest rates low for a "considerable time," sending U.S. stocks sharply higher. Treasury bonds posted the biggest one-day selloff in three months. The dollar rallied against the euro and the yen, and gold prices settled unchanged. Oil prices rose as traders closed out positions following a dramatic plunge in prices in recent months.
OPENING CALL:
In a light day for data releases in Asia on Thursday, China reports new homes price data for November. The average price of new homes in 70 Chinese cities fell in October, the sixth straight month-on-month decline, but at a slower pace as some home buyers returned to the market after Beijing eased mortgage rules. Many investors are concerned that a prolonged property slump could further erode growth in the world's second-largest economy.
EQUITIES:
U.S. stocks closed sharply higher after the Federal Reserve retained its pledge to keep interest rates low for a "considerable time."
The Fed statement, as well as a rally in energy stocks, propelled the Dow Jones Industrial Average and the S&P 500 index to their biggest percentage gains since 2013 and snapped a three-day losing streak for stocks. Trading volume was the third-highest of any day this year.
Going into the Fed meeting, many investors had for some time expected the Fed to signal a more determined path toward raising interest rates next year by removing language from its monetary-policy statement that it intended to keep rates low for a "considerable time." Instead, the Fed said officials believe the central bank "can be patient," adding that new description of their stance was "consistent" with past assurances that rates would stay low for a "considerable time.
"We still have what I would call a supportive Fed," said Rex Macey, chief allocation officer at Wilmington Trust. "They're watching things but they're not going to act too quickly. I think the market is happy with a slow-moving, gentle adjustment period, and that's what the Fed seems to be telegraphing."
Some investors seized on indications that, once the Fed raised interest rates for the first time since 2006, the central bank would proceed slowly with any further rate hikes. As a result, stocks will stay appealing when compared with the low returns on bonds, money managers said.
"We've been in a six-year bull market that's been driven by free money, and the drumbeat of free money becoming a little less free had been a little louder until today," said Jay Kaplan, a portfolio manager for The Royce Funds, which manages about $33 billion, noting that with the Fed's statement it looks the end of free money has been pushed out some. "That gives a little extra bit of happiness today for stocks."
In corporate news, FedEx, in the midst of its holiday shipping rush, reported earnings for its November quarter that increased less than expected. Shares fell 6.48, or 3.72%, to 167.78.
Shares of Darden Restaurants rose 1.17, or 2.09%, to 57.08 as the company late Tuesday showed progress in turning around its ailing Olive Garden chain, posting the first positive quarter of same-store sales in more than a year and beating analysts' expectations.
Web-based small-business lender OnDeck Capital Inc.'s stock surged in its trading debut. OnDeck's shares rose 7.98, or 39.90%, to $27.98, far above their initial public offering price of $20.
Stocks in Asia mostly shook off turmoil in emerging markets, with Shanghai and Japan rising on Wednesday ahead of the U.S. Federal Reserve's policy outlook.
FOREX:
The dollar jumped against the yen and the euro after Federal Reserve Chairwoman Janet Yellen signaled the central bank could raise U.S. interest rates at its April 2015 meeting at the earliest.
The Federal Open Market Committee in its statement delivered a message of patience for raising interest rates. But Ms. Yellen, in her news conference, said the central bank was unlikely to raise rates for the "next couple of meetings" and said she wanted to discourage the idea that the Fed would act only at meetings that are followed by news conferences.
The Fed's third meeting for 2015 is scheduled for April 28-29 and it won't include a news conference. Ms. Yellen's statement gave the market a timeline for the earliest possible increase in U.S. rates, said Martin Schwerdtfeger, currency strategist at TD Securities.
"The fact that she explicitly mentioned that policy will not be altered for two meetings, she is implying the third meeting is a go for higher rates," Mr. Schwerdtfeger said. "It does not preclude a rate hike around the end of April, the next scheduled meeting, if economic conditions improve to the point it would warrant a rate hike, and the dollar has gained on that."
The market had expected the Fed to raise rates around the middle of 2015. Higher interest rates in the U.S. would make the dollar more attractive as it would boost returns on assets denominated in the currency.
BONDS:
Treasury bonds posted the biggest one-day selloff in three months as comments from Federal Reserve Chairwoman Janet Yellen renewed some concerns that the central bank may raise interest rates sooner than many investors anticipate.
The selloff followed a rally a day earlier that had sent the yield on the benchmark 10-year note to the lowest level in more than a year. Some traders said Ms. Yellen's remarks, along with stabilization in Russia's currency from recent turmoil, drove investors to cash in some chips from the Treasury market.
The Fed concluded its two-day monetary policy meeting. In a statement, the central bank continued to signal patience in raising interest rates. In a subsequent press conference, Ms. Yellen said the Fed won't raise interest rates for at least the "next couple of meetings."
The comments raised anxiety in the bond market that a rate increase could come as soon as the April 2015 policy meeting. That will be sooner than the second half of 2015 that many investors currently expect. Ms. Yellen has long been a leading advocate of keeping interest rates near zero to support the economy.
"The bond market took the comments as more hawkish," said Adrian Miller, director of fixed-income strategies at GMP Securities LLC in New York. "The Fed chair is never that specific" in talking about the timing of interest-rate policy.
Higher interest rates will make newly-issued bonds more attractive, depressing the value of existing bonds held by investors.
Global data continued to show faltering economic growth overseas even as the U.S. economy has gained traction.
COMMODITIES:
Oil prices rallied as traders closed out positions following a dramatic plunge in prices in recent months.
Market watchers attributed the rebound to traders who had bet on lower prices closing out positions. Oil prices have plunged nearly 50% since June to the lowest level in more than five years.
"Commodity guys love to be contrarians," said Michael Hiley, head of the energy over-the-counter trading desk at brokerage LPS Partners Inc. He noted that the U.S. oil benchmark had failed to trade above the previous day's highs for 16 straight days. Once the contract rose to trade above $57.15 a barrel--Tuesday's intraday high--the price rose sharply, indicating that algorithmic traders may have used that as an indicator to buy.
Prices pared some gains after settlement as the dollar strengthened on signs that the Federal Reserve is likely to raise short-term interest rates in 2015. Oil is traded in dollars, so a stronger dollar makes oil more expensive for buyers using other currencies.
Analysts said concerns about ample oil supplies and tepid demand continue to dominate the oil market and that this rally could be short-lived.
Traders are also likely trying to lock in profits before year-end, said Donald Morton, senior vice president at Herbert J. Sims Co.
U.S. oil supplies fell by about 800,000 barrels in the week ended Dec. 21, the U.S. Energy Information Administration said Wednesday. Analysts surveyed by The Wall Street Journal had expected a drop of 1.9 million barrels.
However, distillate stocks, including heating oil and diesel, unexpectedly fell by about 200,000 barrels. Analysts had expected a 1-million-barrel increase.
In the metals market, gold prices were flat.
TODAY'S HEADLINES:
Fed Signals 2015 Rate Hikes, Says It Can Be 'Patient'
(MORE TO FOLLOW) Dow Jones Newswires
December 17, 2014 17:31 ET (22:31 GMT)
Federal Reserve officials took a delicate step toward raising short-term interest rates in 2015, introducing language into their policy statement that asserted they would be patient about moving away from near-zero short-term interest rates.
Oracle Reports Higher Revenue
Oracle said its earnings fell 2% on higher costs that offset stronger revenue during the quarter ended November, the first one with Safra Catz and Mark Hurd as co-chief executives. Shares rose 2.6% late as adjusted earnings and revenue beat expectations.
Obama Moves to Normalize Cuba Ties
President Barack Obama said that the U.S. would end what he called an outdated approach to Cuba, beginning to normalize relations and establishing diplomatic ties after five decades of restrictions.
Sony Cancels Release of 'The Interview'
Sony Pictures said it would cancel the Dec. 25 release of its controversial comedy "The Interview." The move came as four big movie theater chains decided not to play the movie following threats of terrorism.
ICE Proposes Major Stock-Market Overhaul
In a draft letter being circulated among large banks and investment firms, ICE is said to be proposing a trade-off between exchanges and brokers by dropping the fee for trading stocks in a trade-off with brokers.
UBS Loses Appeal in French Tax Evasion Probe
UBS failed to win relief from having to pay a $1.37 billion bond as part of a French probe into assistance provided by the Swiss bank to French tax evaders, prompting the lender to take its case to the European Court of Human Rights.
Ruble Strengthens After Central Bank Acts
Russia's battered ruble recovered some of its recent losses against the dollar as the market welcomed measures by the Bank of Russia to shore up the country's banks, and the Finance Ministry said it would start selling its excess foreign currency holdings.
Avon Formally Settles Foreign Bribery Allegations
Avon Products settled foreign bribery charges involving its China unit with the U.S. Department of Justice, agreeing to pay $67.6 million in criminal penalties.
China Approves Syngenta Biotech Corn
China's Ministry of Agriculture has approved a controversial biotech corn product that has been blamed for the collapse of U.S. corn exports to the big Asian market, U.S. Agriculture Secretary Tom Vilsack said.
FedEx Profit Rises Less Than Expected
FedEx reported that holiday peak shipping volume in November was lower than what retailers predicted, resulting in a slight dip in margins for its ground business as it spent more money to prepare for the holidays.
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ECB's Coeure: Broad Consensus on ECB Council That More Stimulus Needed
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TODAY'S CALENDAR:
0030 AUS Nov Foreign Exchange Transactions and Holdings of Official Reserve Assets
0030 AUS Dec RBA Bulletin
0001 UK Nov UK monthly automotive manufacturing figures
0130 CHN Nov House Price Index
0830 HK Nov Unemployment
0830 HK Nov Underemployment
0900 GER Dec Ifo Business Climate Index
0930 UK Nov UK monthly retail sales figures
0930 UK Nov CML mortgage lending figures
0930 UK Nov Capital issuance
1000 EU Oct Construction output
1000 ITA Oct Balance of Payments
1100 FRA Least Developed Country (LDC) IV Monitor's Report launch
1330 US 12/13 Unemployment Insurance Weekly Claims Report - Initial Claims week)
1330 US U.S. Weekly Export Sales
1330 CAN Oct Employment Insurance
1330 US Q3 Travel & Tourism Satellite Account
1445 US Dec US Flash Services PMI
1445 US Bloomberg Consumer Comfort Index
1500 US Nov Leading Indicators
1500 US Dec Philadelphia Fed Business Outlook Survey
1500 US 12/6 DJ-BTMU U.S. Business Barometer
1530 US 12/12 EIA Weekly Natural Gas Storage Report
1600 US U.S. Treasury Sec Lew chairs Financial Stability Oversight
2130 US Foreign Central Bank Holdings
2130 US Federal Discount Window Borrowings
2130 US Money Stock Measures
(END) Dow Jones Newswires
December 17, 2014 17:31 ET (22:31 GMT)
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