Asian equities not quite sure what to do about the Fed cut yesterday
Investor sentiment is a bit mixed on the day with US futures riding higher after a sharp decline yesterday despite the Fed cutting rates by 50 bps. That might also owe a bit to Joe Biden being favoured ahead of Bernie Sanders in the Democratic primaries overnight.
In Asia, the Nikkei is closing near flat levels after opening with a gap lower while the Hang Seng and Shanghai Composite indices are both down by around 0.1% now.
The fact is that the Fed cut yesterday has failed to inspire market confidence and with 10-year Treasury yields sitting under 1% (!), it says a great deal about how the market continues to see itself being able to bully Powell & co. into a decision.
As Adam pointed out earlier this week, they just don't have a backbone really.
In any case, for trading today, it is a lot about trying to digest the aftermath of the Fed decision. In that sense, the focus should be trying to gauge and see what other central banks may do in response and how virus developments will progress from hereon.
The dollar fell in reaction to the move by the Fed yesterday but as other policymakers around the world are set to join in on the race to zero rates, that weakness may not last for too long - though any major upside is also lacking with the dollar "carry trade" disappearing.
