Stocks
Asian markets wobble ahead of Fed as China fears dent sentiment
Asian investors trod cautiously Monday as they struggled to build on recent equity gains, with debate swirling around how big an expected US interest rate cut will be this week, while sentiment was being dragged by worries about the Chinese economy.
The yen edged to a new high since December ahead of the Federal Reserve decision on Wednesday and a policy meeting at the Bank of Japan two days later.
Data showing US inflation slowed more than expected last month to its weakest pace since February 2021 has sparked fresh talk that Fed officials will announce a bumper 50-basis-point cut and continue easing into the new year.
However, while bets on such a move have risen, some analysts warned that it could send a signal that decision-makers are worried about the economy, particularly after two readings showing the labour market was softening.
While bank officials have played their cards close to their chest, they have hinted that they are willing to discuss a bigger cut, while former New York Fed chief Bill Dudley said he thought “there’s a strong case for 50”.
Michael Krautzberger at AllianzGI said: “The Fed, like other central bankers, are now focused on economic growth rather than inflation risks and becoming increasingly worried about being behind the curve on policy — cutting rates too late to avert a recession or sharper growth slowdown.
“Therefore, in our view, the risks of larger rate cuts at subsequent meetings this year cannot be discounted, especially if labour market activity deteriorates faster than currently expected and inflation continues to head towards target.”
All three main indexes on Wall Street pushed higher Friday, with the Dow and S&P 500 within a whisker of their record highs.
But Asian investors were unable to extend the rally, with Hong Kong, Singapore and Wellington down but Sydney, Taipei and Manila edging up.
Trade was muted by holidays in Tokyo, Shanghai, Jakarta and Seoul.
On currency markets the yen hit 140.43 per dollar, its strongest level since the end of December, while gold remained at all-time highs after hitting a record $2,586.10 per ounce Friday.
Traders are keeping tabs on developments in China after more weak data on credit, retail sales, industrial production and house prices stoked concerns about the state of the world’s number two economy.
The figures “collectively add to concerns that policy measures announced in recent weeks and months have so far failed to have any measurable impact in lifting economic growth thus far in the third quarter after the weak second quarter performance”, said National Australia Bank’s Ray Attrill.
He added that investors will be keenly watching the government’s upcoming Politburo meeting — the date of which has yet to be set.
In light of the latest batch of disappointing figures, the central bank outlined plans to support the economy, saying it will “make maintaining price stability and pushing for the mild rebound in prices an important consideration for monetary policy and meet reasonable financing demand for consumption in a more targeted way”.
The Fed’s decision is set to be followed by the BoJ on Friday, with most analysts expecting it to hold rates after a surprise hike at the end of July sparked turmoil on markets.
“A consecutive hike would likely be seen as too aggressive, especially given criticism that the BoJ’s hawkish stance contributed to global market turbulence in early August,” said IG analyst Tony Sycamore.
“That said, stronger-than-expected inflation and wage growth in Japan over the past month have given the BoJ confidence in a wage-price cycle that could keep inflation above two percent, paving the way for more policy tightening.”
– Key figures around 0230 GMT –
Hong Kong – Hang Seng Index: DOWN 0.6 percent at 17,271.92
Tokyo – Nikkei 225: Closed for a holiday
Shanghai – Composite: Closed for a holiday
Dollar/yen: DOWN at 140.53 yen from 140.76 yen on Friday
Euro/dollar: UP at $1.1088 from $1.1079
Pound/dollar: UP at $1.3141 from $1.3125
Euro/pound: DOWN at 84.37 pence from 84.40 pence
West Texas Intermediate: UP 0.5 percent at $68.98 per barrel
Brent North Sea Crude: UP 0.4 percent at $71.86 per barrel
New York – Dow: UP 0.7 percent at 41,393.78 (close)
London – FTSE 100: UP 0.4 percent at 8,273.09 (close)
Dhaka Stock Market DSE, Bourse on the last working day of the week, 19th September, ended with a hike in Indices and Turnover from the previous working session. This information is known from DSE sources.
594 crore 77 lakh taka shares were traded on this day. 41 crore 11 lakh less tradings were done in DSE today compared to the previous workday, 18th September, Shares worth Tk 553 crores 65 lakh shares were traded last time, Wednesday.
The benchmark DSEX added 41.13 points or 5,735 The Shariah-based index DSES gained 12.13 point or 1,257 and the blue-chip index DS30 increased by 29.46 points or 2,106.
Of the issues traded, 150 advanced, 191 declined and 56 remained unchanged.
SK Trims Limited ranked top gainer on DSE, the share price increased by Tk 1.50 paisa or 8.57 percent. On this day, the share was last traded at Tk 19.00 paisa.
Hami Industries PLC ranked top loser on the DSE, the share price dropped by Tk 9.80 paisa or 9.40 percent. On this day, the share was last traded at Tk 94.50 paisa.
DSE topped on trade is grameenphone Limited 31 crore 47 lakh takas of company shares have been traded.
A total of 33 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 70 lakh 41 thousand 263 shares of the companies were traded. The financial value of which is 49 crore 16 lakh taka.
Tokyo’s Nikkei led Asian markets higher Thursday as the yen hit a two-week high after the Federal Reserve announced a bumper interest rate cut and pledged a series of further reductions that boosted sentiment.
After a keenly awaited meeting the US central bank decided to lower borrowing costs for the first time since the start of the pandemic by opting for a half-point reduction.
However, the bigger of two options — some had expected a 25-basis-point cut — split opinion, with some warning it could reignite inflation while others said it showed the bank was keeping ahead of the curve in supporting the economy in light of weak jobs data.
The bank’s “dot plot” guidance indicated another 50 points of reductions before January, followed by 100 next year and 50 in 2026.
After the meeting, Fed boss Jerome Powell said the economy was in “good shape” pointing to lower inflation and solid growth.
“The labour market is in a strong place. We want to keep it there,” he told reporters.
But he cautioned that the central bank would “go carefully” and weigh the matter “meeting by meeting” as it looks to keep easing.
“It is time to recalibrate our policy to something that is more appropriate, given the progress on inflation, and on employment moving to a more sustainable level.
“This is the beginning of that process.”
Equities have rallied through the year on expectations the cycle of tightening, which started in 2022, would come to an end this year as inflation slows and the labour market softens.
But, after an initial burst higher following the announcement — pushing the S&P 500 to a new record — Wall Street retreated and ended in the red.
Analysts pointed out that investors had largely factored in 125 points of reductions this year, so a correction in valuations was to be expected.
Christian Hoffmann at Thornburg Investment Management said: “Considering the one dissenting voice from a governor… the Fed must have grappled with concerns not just about doing too much versus too little, but also concerns about signalling to markets, and perhaps more subtly, political optics and legacy considerations.
“The setup for this meeting was not ideal. With the market almost evenly split between a 25 basis point and 50 basis point cut, hopes were bound to be dashed. On top of that, US equity indices rallied nearly every day last week and are flirting with all-time highs and elevated valuations.”
Asian markets brushed off the weak US lead and mostly rose, with Tokyo piling on more than two percent as exporters were boosted by a weaker yen, which hit almost 144 per dollar, a level last seen at the start of the month.
That was just days after breaking below 140 for the first time since last summer.
There were also healthy gains in Hong Kong, where the de facto central bank lowered its own rates owing to the city’s currency peg to the dollar, while Shanghai, Sydney, Singapore, Wellington, Taipei, Manila and Jakarta also advanced.
Investors are now turning their attention to the Bank of Japan’s policy meeting, which concludes Friday and is expected to see officials stand pat, having sent markets into turmoil last month with a surprise hike — after doing so earlier this year for the first time since 2007.
Gold was sitting around $2,550, having burst to a new record high above $2,600 as the prospect of lower rates makes the precious metal more attractive as an investment.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 2.5 percent at 37,284.43 (break)
Hong Kong – Hang Seng Index: UP 0.6 percent at 17,757.70
Shanghai – Composite: UP 0.3 percent at 2,725.31
Dollar/yen: UP at 143.61 yen from 142.29 yen on Wednesday
Pound/dollar: DOWN at $1.3182 from $1.3207
Euro/dollar: DOWN at $1.1092 from $1.1120
Euro/pound: DOWN at 84.14 pence from 84.17 pence
West Texas Intermediate: DOWN 0.8 percent at $70.37 per barrel
Brent North Sea Crude: DOWN 0.5 percent at $73.26 per barrel
New York – Dow: DOWN 0.3 percent at 41,503.10 (close)
London – FTSE 100: DOWN 0.7 percent at 8,253.68 (close)
The Bangladesh Securities and Exchange Commission (BSEC) has appointed two new independent directors to the Dhaka Stock Exchange (DSE) board, following a dispute that prevented the previous appointees from assuming their positions. Additionally, seven independent directors have been appointed to the Chittagong Stock Exchange (CSE). These decisions were made during a commission meeting held on September 18, 2024.
According to a press release from BSEC, the newly appointed independent directors for the DSE are AF Nesaruddin, partner at Hoda Vasi Chowdhury and Co., and Syeda Zakeerin Bakht Nasir, chief consultant and CEO of Z N Consultants. They will replace KAM Majedur Rahman and Helal Uddin, who were unable to take up their roles due to concerns over their appointments violating board regulations. Both individuals have since declined their positions.
The seven independent directors appointed to the CSE are Alamgir Morshed, CEO of Infrastructure Development Company; Professor Saiful Islam from BUET; AKM Habibur Rahman, former managing director of Teletalk; Professor Mahmud Hassan from North South University; M Zulfiquar Hussain, CEO of Grow n Excel; Naznin Sultana, Finance Director at Asian University for Women; and Farida Yasmin, Deputy Secretary at the Financial Institutions Division.
This reshuffling follows a political shift in early August, after which the BSEC verbally requested all independent directors from both the DSE and CSE to resign. On September 1, the BSEC had already appointed seven independent directors to the DSE, though none have yet assumed their roles.
The DSE board, as per the demutualisation scheme, consists of 13 members: seven independent directors, five shareholder directors (one representing strategic investors), and the managing director, who serves as an ex-officio member.
