Asian shares rallied to a ten-year high on Thursday following positive comments from the U.S. Federal Reserve regarding their view of positivity regarding the economy of the country which might lead to a stronger case for another interest rate hike before the end of the year. The markets are also awaiting the official announcement from U.S. President Donald Trump regarding the next head of the central bank or the federal reserve.
According to reports, the White House currently has plans to choose current Federal Reserve governor Jerome Powell to be the next Fed Reserve chair following the end of current chair Janet Yellen’s term in February. This would be confirmed in an announcement from the Senate later during the week prior to Trump’s trip to Asia.
The markets are also awaiting a tax bill from the U.S. government particularly from the Republicans in the U.S. House of representatives. The announcement of the tax bill was delayed after a day. These provide a possible tax cut worth $6 trillion during the next ten years also the details are still currently hazy on how the remaining will be paid by for by the Republicans.
Outside the United States, the Bank of England is also set to announce its first interest rate hike since the past ten years as the bank stated that it will begin to cut down years of stimulus.
The MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.2% which is its highest level seen since November 2007. Japan’s Nikkei index also was up by 0.5% which is its highest rally since the year 1996 which represents a gain of around 2.4% for the holiday weekend.
In China, the Shanghai Composite Index lost around 0.4% while the blue-chip CSI300 Index slipped by 0.2%. However, the Kospi index from South Korea closed down by 0.4% to 2,546.36. The S&P/ASX 200 also inched 0.1% lower despite the gains from stocks coming from the mining and energy sector due to the sudden decline in financial stocks during the same trading session.
Most of the markets are currently positive of the central bank being back on possibly raising interest rates before the end of the year. Other market signs of the Fed reserve possibly announcing a rate hike as reports from last week from the Labor Department in the United States that nonfarm payrolls have grown by 303,000 during the month of October which is a huge improvement from the 40,000 decline in the prior month.
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