China shrugs off downgrade, Asian markets gain on Fed indicators, oil surge

San Francisco Federal Reserve President John Williams said he is spending more time thinking about how fiscal policies under U.S. President Donald Trump could impact the economy, and so far he sees small short-term gains and little for the longer term.

Oil prices fell about 1.5 percent after an OPEC delegate said the group had chose to extend production cuts for nine months, which traders say have already been baked into prices, and not longer as many investors were hoping for. The French CAC 40 and the FTSE 100 index in Britain were unchanged. Wall Street was poised to open higher a day after pushing into record territory.

FED'S PLANS: According to the minutes released Wednesday, Federal Reserve officials discussed steps for shrinking the USA central bank's $4.5 trillion in bond holdings.

"Most participants judged that if economic information came in about in line with their expectations, it would soon be appropriate for the (Federal Open Market) Committee to take another step in removing some policy accommodation", said the minutes.

Dow e-minis were up 57 points, or 0.27 percent, with 31,843 contracts changing hands at 8:33 a.m. ET (1233 GMT). The comments indicate policymakers are sticking to their plans to gradually remove the stimulus that has helped prop up stock markets for years.

Federal fund futures implied that traders believe there is an 83 percent probability that the Fed will raise rates by a quarter of a percentage point at its June meeting, according to CME Group's FedWatch tool.

Benchmark Brent crude oil LCOc1 rose 55 cents a barrel, or 1.0 percent, to $54.51. And even though OPEC and a group of other oil-producing nations extended their cuts in production, the price of oil fell nearly 5 percent and energy companies took steep losses.

The Nikkei 225 stock index in Tokyo climbed 0.4 per cent to 19,821.44 and Hong Kong's Hang Seng jumped 0.7 per cent to 25,598.44.

"After the golden cross of the 50-day moving average over the 200-day moving average and yesterday's firm buying early on towards $1,250, it looks as if prices are consolidating the recent rally", said Sucden Financial analyst Kash Kamal. South Korea's Kospi jumped 0.9 percent to 2,336.87 while the Shanghai Composite index slipped 0.2 percent higher to 3,057.69. Shares were also higher in Taiwan and Southeast Asia. Oil prices have rallied over the last few weeks as investors hoped for an extension, and experts were skeptical that the deal will do much to boost prices.

CURRENCIES: The dollar dipped to 111.76 yen from 111.90 yen. It lost 11 cents to settle at $51.36 per barrel on Wednesday.

Oil prices tumbled 5 per cent on Thursday, leading to the biggest daily per centage slide in crude prices since early March.

Although there was a wider than expected goods trade balance, the dollar edged higher following the data with EUR/USD testing the 1.1200 area.

  • Zachary Reyes