Asian markets boosted by Fed but dollar sinks
Asian markets boosted by Fed but dollar sinks
After a much-anticipated meeting the US central bank lifted borrowing costs by a quarter of a point but suggested only another two rises this year, confounding talk of a possible three or four.
Fed boss Janet Yellen also said that while President Donald Trump’s planned big-spending, tax-cutting plans could fuel growth and inflation, she would keep a wait-and-see attitude before making any decisions on how to shape monetary policy.
The news, which came with an upbeat assessment of the world’s top economy, fired US stocks and sent the greenback tumbling in US trade. And that continued into Asian business, with Hong Kong up 1.7 percent and Shanghai adding 0.8 percent.
The Fed move led Hong Kong’s de facto central bank to lift its own borrowing costs owing to a monetary policy link, and the Chinese central bank to lift short-term rates it charges banks to borrow cash in a bid to prevent a flood of cash out of the country and support the yuan.
The People’s Bank of China has struggled in recent months to staunch capital flight caused by investors looking for better returns in the US, pushing the yuan to around eight-year lows against the dollar.
Andrew Polk, Beijing-based head of China research at Medley Global Advisers, said: “Moving in line with the Fed also shows that China is still essentially importing US monetary policy, despite increased capital controls over the past several months.”
Seoul advanced 0.8 percent, Sydney ticked up 0.2 percent and Singapore was 0.8 percent higher, while there were also big gains in Wellington, Taipei, Jakarta and Manila.
“Whether folks agree or disagree with the need to hike, the key here is that the Fed has signalled to markets, and importantly US and global businesses, that it is in control and the economy is moving as expected,” said Greg McKenna, chief market strategist at AxiTrader, in a note.
“Janet Yellen stressed in her press conference that the Fed’s decision today was a reflection of where the economy is now with reference to the Fed’s mandate. She highlighted that the (policy board) was not making a judgment on what impact the Trumponomics stimulus might have on the economy.”
Tokyo ended 0.1 percent higher, recovering from early losses as a pick-up in the yen was offset by the Bank of Japan’s upbeat assessment of the nation’s economy. The US unit bought 113.25 yen Thursday, down from Wednesday in New York and well off the levels above 115 yen touched earlier this week.
The greenback was also sharply down elsewhere, with the Australian dollar surging 1.5 percent, South Korea’s won 1 percent higher and the Mexican peso soaring 2.2 percent. The New Zealand, Canadian and Taiwanese dollars also posted strong gains of around 1 percent.
Stephen Innes, senior trader at OANDA, said: “The absence of any observable hawkish guidance from the Fed will leave the greenback under pressure near term.”
The euro sat comfortably above $1.07, more than one cent up from earlier Wednesday, as exit polls showed Dutch Prime Minister Mark Rutte easily defeating far-right, anti-EU rival Geert Wilders in a vote considered a bellwether of populist support in Europe.
The victory raised hopes extremist parties in France and Germany will also be held off in elections later this year.
“Following the Dutch election result, it’s unlikely to see concerns heighten over the French election,” Shinichiro Kadota, a senior foreign-exchange strategist at Barclays Securities Japan in Tokyo, told Bloomberg News.
Flight rights group takes Ryanair to court over strike compensation
- Ryanair had to cancel around 1 in 6 flights last week due to a walk-out by pilots in five European countries
- The disruption affected 55,000 travelers
BERLIN: German passenger rights company Flightright is taking Ryanair to court over whether it should pay financial compensation to passengers affected by strikes at Europe’s largest low-cost carrier.
Ryanair had to cancel around 1 in 6 flights on Friday due to a walk-out by pilots in five European countries, disrupting an estimated 55,000 travelers.
The worst affected country was Germany, where 250 flights affected around 42,000 passengers.
EU rules state that passengers can claim monetary compensation of up to €400 for flights within the region for canceled or delayed flights, unless the reason is extraordinary circumstances, such as bad weather.
Strikes have generally fallen under extraordinary circumstances although a ruling by the European Court of Justice in April said that a wildcat strike by staff at German airline TUIfly following a restructuring could not be classed as extraordinary circumstances. Flightright said it believes Ryanair is therefore obliged to pay monetary compensation to customers and so has filed a complaint with a court in Frankfurt in a bid to clarify the rules around strikes.
A spokeswoman for the court said she was aware of the Flightright statement, but that she had not yet seen the complaint.
Ryanair said it fully complies with the European legislation on the matter, known as EU261.
“Under EU261 legislation, no compensation is payable when the union is acting unreasonably and totally beyond the airline’s control. If this was within our control, there would be no cancelations,” a spokesman said.
Passenger rights groups such as Flightright help passengers to claim compensation from airlines under EU261 rules but in exchange for a share of the compensation received.
Many European airlines, including Ryanair, therefore urge passengers to file claims with them directly instead.