Global Markets Report

Australia

Australian shares are set to rise at the open, as US investors embraced the idea that central banks could be done raising rates.

ASX futures were up 1.2% or 85 points as of 7:30am on Friday, suggesting a higher open.

US stocks posted broad gains as investors embraced the idea that central banks could be done raising rates as the Bank of England held policy steady following on the Fed's announcement yesterday.

The dollar fell, along with Treasury yields, which lost some of their recent appeal, while oil prices rose on hopes a stronger economy will increase demand.

Starbucks shares jumped 9.5% after earnings beat estimates.

DJIA climbed 564 points, or 1.7%, to 33839, the S&P 500 gained 1.9% to 4317 and the Nasdaq jumped 1.8% to 13294.

In commodity markets, Brent crude oil rose 2.6% to US$86.81 a barrel while gold was flat at US$1,985.47.

In local bond markets, the yield on Australian 2 Year government bonds was lower at 4.36% while the 10 Year yield was also down at 4.79%. US Treasury notes were down, with the 2 Year yield at 4.99% and the 10 Year yield at 4.66%.

The Australian dollar hit 64.26 US cents up from the previous close of 63.91. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was down at 100.30.

Asia

Chinese shares closed lower, weighed by semiconductor and hardware stocks. Semiconductor Manufacturing International Corp. fell 1.55%, LONGi Green Energy Technology shed 3.9% and Hangzhou Hikvision Digital Technology declined 0.8%. Auto names outperformed following stronger new energy vehicle sales in October, said Redmond Wong, a market strategist from Saxo. SAIC Motor gained 1.8% and Seres Group advanced 2.9%. Bank stocks also rose with China Merchants Bank adding 0.8% and Industrial Bank rising 0.9%. The benchmark Shanghai Composite Index closed 0.45% lower at 3009.41, while the Shenzhen Composite Index and the ChiNext Price Index each declined 1.0%.

Hong Kong shares closed higher, tracking Wall Street's overnight gains after the U.S. Fed left interest rates unchanged. Fed chair Powell's remarks were more dovish than expected and Asian equity markets are likely to see some near-term relief rally, Nomura analyst Chetan Seth said in a research note. Tech and real estate stocks led the gains. Xiaomi Corp. rose 6.05% and Lenovo gained 3.9%. Link Real Estate Investment Trust was 6.7% higher and Sun Hung Kai Properties was up 1.85%. Pharmaceutical stocks were broadly lower, with Wuxi Biologics (Cayman) losing 1.9% and Sinopharm Group shedding 1.4%. The benchmark Hang Seng Index rose 0.75% to 17230.59. The Hang Seng Tech Index ended 1.6% higher.

Japanese stocks ended higher, led by gains in electronics stocks, as concerns eased about borrowing costs following the Fed's pause on rate increases. Advantest gained 10% and Kyocera climbed 5.9%. The Nikkei Stock Average rose 1.1% to 31949.89. The 10-year Japanese government bond yield fell 4 basis points to 0.915%. Investors are focusing on earnings as well as any potential escalation in the Middle East conflict.

Indian shares ended higher, tracking gains in most regional markets. Sentiment in equities was buoyed after the U.S. Federal Reserve kept interest rates unchanged overnight. Market expectations of a hike in December were pared back as Fed chair Powell said tighter financial conditions are likely to weigh on economic activity, ANZ analysts say in a research note. Tech and energy stocks led the gains. GAIL (India) rose 3.7% and Deep Industries advanced 3.5%. Vodafone Idea was up 7.6% and Bharti Airtel was 1.2% higher. Almost all the stocks on the benchmark index gained during the session with IndusInd Bank the best performer, rising 2.0%. Dabur India put up 2.6% after 2Q revenue rose 7.3% on year. The Sensex ended 0.8% higher at 64080.90.

Europe

European stocks rose as investors take heart from central-bank decisions to leave interest rates unchanged. The Stoxx Europe 600, DAX, CAC 40 and FTSE 100 rose more than 1% after the Federal Reserve and the Bank of England held US and UK rates. "Once again hopes of a peak in interest rates have seen stocks rally, doubtless based on expectations that rates will pause and in due course come down," IG analyst Chris Beauchamp writes. Still, such optimism has proved unfounded in the past and equity investors should be wary, he said. Meanwhile, the rate optimism boosted property shares, with Finnish real-estate firm Kojamo up 17% after reporting higher revenue and net rental income between July and September.

The FTSE 100 closed Thursday up 1.42% after the Bank of England held rates steady, raising hopes the tightening cycle is done. This rally comes almost on cue in seasonality terms, but is doubtless based on expectations that rates will pause here, and in due course come down, IG Group chief market analyst Chris Beauchamp says in a market comment. However, investors have been disappointed on this front before, so need to resist the temptation to charge back into stocks too quickly, Beauchamp says. "They [rate rises] are not off the table, just out of reach for now," Beauchmap says.

North America