Shares opened higher in Europe on Thursday after a mixed session in Asia following the Federal Reserve’s decision to cut its benchmark interest rate for a second time this year.
Germany’s DAX edged 0.1% higher to 12,406.82 while the FTSE 100 in Britain advanced 0.2% to 7,331.84. In France, the CAC 40 gained 0.5% to 5,641.35. U.S. shares looked set for losses, with the Dow future contract down 0.3% and that for the S&P 500 also 0.3% lower.
Banks led gains following the quarter-point cut in the Fed’s short-term interest rates to a range of 1.75% to 2%. Deutsche Bank jumped nearly 2% while Royal Bank of Scotland Group advanced 2.4% and HSBC climbed 0.7%.
“Everything feels a little flat in the markets after the Fed left investors deflated and frustrated, despite delivering the 25 basis point rate cut they demanded,” Craig Erlam of Oanda said in a commentary.
“While investors may be frustrated about this, it’s probably not the worst approach as we don’t know how long the trade war will last, how much worse it will get and what the full consequences will be. “
Japan’s central bank opted to keep its own monetary policy unchanged and its key interest rate at minus 0.1%, as expected.
The decision came amid signs of weaker consumer demand and exports and dimming confidence in the business outlook.
“The bank did highlight increasing downside risks from external demand and stated that it will pay closer attention to the possibility that momentum towards reaching its 2% inflation target will be lost,” Marcel Thieliant of Capital Economics said in a commentary.
In Asia, the Nikkei 225 index gained 0.4% to 22,044.45 while the Kospi in Seoul climbed 0.5% to 2,080.35. Australia’s S&P ASX 200 added 0.5% to 6,717.50, while late gains pushed the Shanghai Composite index up 0.5%, to 2,999.28.
Hong Kong’s Hang Seng declined 1.0% to 26,480.74. Its monetary authority announced a quarter-percentage point rate cut on Thursday. The monetary authority routinely follows the Fed’s lead to keep the Hong Kong dollar rate steady against the U.S. dollar.
India’s Sensex dropped 1.1% to 36,155.69. Shares also fell in Singapore, Taiwan, Thailand and Indonesia.
Brazil’s central bank cut its benchmark rate on Wednesday, by 0.5%, and more decisions were expected Thursday from Indonesia, the Bank of England and the central banks in Sweden and Norway.
Overnight on Wall Street, stocks initially declined after the central bank announced the widely expected rate cut. Its policy statement failed to indicate whether more rate cuts were likely this year, though the central bank left the door open for additional rate cuts if the economy weakens.
The Fed is trying to combat threats to the U.S. economy, including uncertainties caused by President Donald Trump’s trade war with China, slower global growth and a slump in American manufacturing.
The U.S. market is on track for a slight weekly loss after three consecutive weeks of gains driven by signs of an easing in tensions in the U.S.-China trade war.
Fresh talks in the dispute over technology and other policies are due in October.
Bond prices rose and the yield on the 10-year Treasury fell to 1.78% from 1.81% late Wednesday. Investors typically shift money into bonds when they grow more concerned about the economy’s health.
ENERGY: Oil prices were steady as Saudi Arabia said it was restoring production at an oil facility attacked over the weekend. Benchmark U.S. crude gained 14 cents to $58.25 per barrel in electronic trading on the New York Mercantile Exchange. Overnight, it lost $1.23 to settle at $58.11 per barrel. Brent crude, the international standard, picked up 19 cents to $63.79.
The dollar slipped to 108.04 Japanese yen from 108.42 yen on Wednesday. The euro rose to $1.1057 from $1.1029.