Fed: $4.5 Trillion Balance Sheet To Be Reduced This Year; Dollar Slides

USA stocks extended gains on Wednesday, with the S&P 500 posting a new closing record, as Wall Street meditated on the Federal Reserve's minutes released in the afternoon.

The minutes were seen to indicate heightened Fed caution toward interest rate hikes and took the wind out of an earlier bounce by the dollar, which had been plagued recently by United States political concerns centered on President Donald Trump.

The S&P 500 index showed 49 new 52-week highs and three new lows, while the Nasdaq recorded 54 new highs and 14 new lows. "It has the momentum to surpass the $1.1300 mark and we could see the rise continue towards $1.1500", said Daisuke Karakama, market economist at Mizuho Bank.

Policy makers agreed that they should provide additional details of the plan "soon" and almost all said it would be appropriate to start the process this year, provided their expected path for rate hikes stays on track.

The peso has tracked upwards since Mexico's central bank unexpectedly hiked its benchmark interest rate by 25 basis points to 6.75 per cent on Thursday. Australia's S&P ASX 200 rose 0.4 percent to 5,789.60. Elsewhere hard drive maker Western Digital added $2.28, or 2.6 percent, to $90.31 and chipmaker Nvidia rose $1.78, or 1.3 percent, to $138.81. Meanwhile, gold prices, which are sensitive to United States interest rates, will likely be impacted negatively by rate rises.

The Canadian dollar was at C$1.3405 per dollar after touching C$1.3389, its strongest since April 19, after the Bank of Canada gave a more upbeat assessment of the economy than some investors expected.

Toronto-Dominion Bank reported second-quarter results which were ahead of market expectations, helped by a strong performance at its retail and investment banking businesses.

But on Thursday the Nikkei in Tokyo ended 0.4 per cent higher and Sydney put on 0.4 per cent. Shanghai jumped 1.4 per cent as dealers brushed off a cut in China's debt rating Wednesday by Moody's, with speculation state-backed funds were supporting the market.

Fed policymakers also discussed at length the reasons for the first-quarter slowdown and why a measure of underlying price gains also fell further below their 2 percent inflation target, according to the minutes.

Investors await the outcome of discussions in Vienna between OPEC and other oil-exporting countries on whether to extend output cuts. The company also said it will cut $20 million in spending and its stock gained $1.68, or 40.5 percent, to $5.83. Benchmark U.S. crude lost 20 cents to $51.16 a barrel in NY and Brent crude, the global standard, fell 14 cents to $53.82 a barrel in London.

The Norwegian crown, another oil-linked currency also fell initially, before recovering to stand 0.1 percent higher to 9.3320 crowns per euro. The chance of fewer USA rate rises may be expected to bolster non-yielding assets such as the oldest haven. The Kospi in South Korea gained 0.2 percent.

  • Zachary Reyes