Richard Cayne Meyer explains that after the Fed’s decision on September 18th not to taper bond buying just yet global stocks jumped to a five-year high on Thursday the 19th, while bonds and metals rallied after the Federal Reserve unexpectedly refrained from reducing U.S. monetary stimulus. The Malaysian ringgit strengthened the most since 1998.
The MSCI All Country World Index climbed 1.2%, set for the highest close since May 2008, as Asia’s benchmark index gained 2.4% and the Stoxx Europe 600 rose 1%. Standard & Poor’s 500 Index futures added 0.2%.
Richard Cayne at Meyer International in Bangkok explains that investors had speculated that the Federal Reserve would begin reducing its $85bn bond-buying plan this month. But in a statement released after its two-day policy meeting, the Fed said there was no fixed timetable for it to begin scaling back, or “tapering”, its stimulus.
The central bank said it was taking a more cautious stance because of an “elevated” unemployment rate and concerns about the U.S. economic recovery. “The committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases,” it said.
The Fed also cut its forecast for growth this year to between 2.0% and 2.3%. That compares to a June estimate of between 2.3% and 2.6%.
Japan – Japan’s exports rose the most since 2010 in August, boosting Prime Minister Shinzo Abe’s growth drive even as rising energy costs extended the streak of trade deficits to the longest since 1980.
Exports rose 14.7% from a year earlier, the sixth straight advance, a Finance Ministry report showed in Tokyo.
A surge in exports to the U.S., along with a rebound in shipments to China in the wake of bilateral tensions last year, are offering momentum to Japan as it prepares for the first sales-tax increase since 1997. Rising competitiveness from the yen’s 20% drop against the dollar in the past year also has helped manufacturers including Panasonic Corp. as they cope with higher energy costs with the nation’s nuclear industry shuttered. Richard Cayne Meyer has maintained and continues to advocate buying the Japanese index as he feels that as long as the yen weakens the index will rise.
“We are finally seeing a clear recovery in exports, led by a weak yen and a moderate global recovery,” said Takeshi Minami, chief economist at the Norinchukin Research Institute in Tokyo.
Richard Meyer Cayne originally from Montreal, Quebec Canada has lived in Tokyo Japan for over 15 years before coming to Bangkok Thailand where he now runs the Meyer Group of companies which forms part of Asia Wealth Group Holdings a London UK listed financial services holding firm.