Hang Seng Index closes above 18,000 for first time in 2 months after Fed rate cut
Hong Kong’s Hang Seng Index closed above 18,000 for the first time in two months after the Fed cut its benchmark rate by a half-point
The Hang Seng Index jumped 2 per cent to 18,013.16 at the close, finishing north of 18,000 for the first time since July 15. Thursday’s gain was the steepest since July 31. The Hang Seng Tech Index rallied 3.3 per cent and the Shanghai Composite Index added 0.7 per cent.
The Fed’s first rate cut in more than four years was accompanied by expectations for an additional reduction of a half-point by the end of the year. Rates traders were pricing in a cut by 70 basis points; Fed Chairman Jerome Powell poured cold water on the idea that more large rate reductions are coming. The S&P 500 Index briefly reached an all-time high before closing 0.3 per cent lower overnight.
“The Fed positioned the 50 basis-point rate cut as a recalibration of policy rates, rather than a sign of concern about the health of the labour market,” said Ray Sharma-Ong, head of multi-asset investment solutions for Southeast Asia at abrdn. “The market is currently re-pricing for the Fed’s guidance of ‘recalibration.’ However, we see that risks are skewed towards more easing, and the Fed may move at a faster pace of rate normalisation than indicated by the median dot.”
