Global Markets Respond To Fed Hike

Asian shares slipped on Friday but were still on track for gains in a week which saw the depreciation of the yuan in China and the introduction of the first U.S. interest rate hike in nearly a decade.

As of Thursday, China’s yuan has weakened against the dollar for 10 straight sessions, the longest weakening streak on record, after the central bank steered the Chinese currency lower.

Taiwan’s central bank cut interest rates for the second time this year and said it would maintain its loose monetary policy to stimulate growth as international trade demand worsened.

The Bank of Japan kept its main monetary stimulus target unchanged Friday pointing to future changes in its purchases of government bonds, exchange-traded funds and real estate investment trusts. The changes will be in light of the Federal Reserve’s interest-rate hike, the oil market rout and recent economic indicators. Japanese Governor Haruhiko Kuroda said earlier this month that while price trends were improving, he wouldn’t hesitate to adjust monetary policy if needed.

Wall Street Down

Wall Street slumped on Thursday as crude oil futures continued their lows against a backdrop of oversupply and a stronger dollar following the U.S. Federal Reserve’s widely anticipated tightening on Wednesday.

According to Angus Nicholson, market analyst at IG in Melbourne, “The global macro dynamics from the beginning of a Fed rate hiking cycle are slowly playing out across the world. In the direct wake of the decision we have seen some dramatic moves in central bank policy with Taiwan cutting its benchmark interest rate, Hong Kong and Mexico both hiking rates, and Argentina removing currency controls and devaluing the peso by 30 percent.”