Wall Street rose, oil and gold rose, US bond yields rose after the US Federal Reserve left its key interest rate unchanged and gave us no clue as to what it might do in June.
A couple hours later the Reserve Bank of NZ left its key rate steady at 2.25% after its surprise drop at its March meeting.
The local market will start with a near 50 point gain after yesterday’s big swing saw early gains replaced by a late afternoon swoon and a 33 point slide for the ASX 200.
Overnight, traders left that behind and set up a near 1% gain for the Australian market, with the Fed’s non-decision helping, along the RBNZ decision.
The Aussie dollar continued to edge lower, then reversed in late trading in early Asian dealings to trade just over 76 US cents as traders shook off fears of a rate cut at next Tuesday’s Reserve Bank meeting and the lack of any move on rates by the Fed and the Reserve Bank of New Zealand.
The S&P 500 rose 3.45 points, or 0.2%, at 2,095.15, with a 0.8% decline in tech stocks driven by the 6.3% slide in Apple shares. Facebook reported after hours and beat all forecasts, sending the shares 9% higher in after hours trading to near record highs. The index had been down in early trading.
The Dow rose 51.23 points, or 0.3%, to close at 18,041.55, more than reversing an earlier 70-point deficit. And the Nasdaq Composite fell 25.14 points, or 0.5%, to finish at 4,863.14. Earlier, the Nasdaq had traded down 62 points as investors digested the weak Apple result and other poor tech sector reports.
Like the Reserve Bank of Australia, the RBNZ is maintaining an accommodative monetary policy and left open the chances of another cut in the near future.
"We expect inflation to strengthen as the effects of low oil prices drop out and as capacity pressures gradually build. Monetary policy will continue to be accommodative. Further policy easing may be required to ensure that future average inflation settles near the middle of the target range. We will continue to watch closely the emerging flow of economic data,“ Governor Graeme Wheeler said in the bank’s statement this morning.
And markets are awaiting the latest decision from the Bank of Japan this afternoon amid feelings it could make a major policy change to offset the gains in the yen and the sharp fall in the Tokyo stockmarket since the January 29 decision to introduce negative rates for part of bank deposits at the central bank.
That moves has completely destabilised Japanese financial markets and there are growing views the economy will stumble into a recession this year and stay there as a result of the January 29 move.
The Fed’s statement early this morning left us with little doubt it was in no hurry to follow on from its December rate rise.
The Fed said the labor market had improved further despite a recent economic slowdown and that it was keeping a close eye on inflation. The first estimate for US economic growth for the March quarter is due to be issued tonight, our time.
The statement said that global economic headwinds remained on its radar, but the Fed removed a specific reference from its last policy statement to the risks they posed.
"The committee continues to closely monitor inflation indicators and global economic and financial developments," the Fed said in a statement following a two-day meeting.
For the third consecutive meeting, it did not include any mention of the balance of risks to the economy.
