US bond yields and dollar went down and Asian shares reached two year peaks after United States Federal Reserve signaled its cautious approach towards future rate hikes. The Fed will also be cautious about reducing its bond holdings valued at $4.5 trillion.
South Korean shares were at the forefront of gains. The .KS11 went up 1.0 percent to reach record highs. Hang Seng. H S I of Hong Kong went north by 0.8 percent to reach peak level since July 2015. Taiwanese shares went up and broke the 17 year high barrier. Nikkei in Japan went up by 0.5 percent.
It is expected that European stocks will take an upswing. Spread betters are are looking at higher openings amounting to 0.3 percent in France's CAC and Germany's DAX.GDAX. Britain FTSE will expectantly see a 0.2 percent higher opening.
Federal Reserve decisions
It was clear from the minutes of the last policy meeting among Federal Reserve officials that interest rates rise would be held off until it was apparent that the economic slowdown in the United States was a temporary affair. Many, however, said that a hike may soon come. These minutes proved that policymakers were in favor of gradual reduction in the US's huge balance sheet. Following minutes, 10 year US Treasuries yield dropped to 2.255 percent. It was 2.297 percent on May 24.
Daisuke Uno of Sumitomo Mitsui Bank said that there have been a considerable change of views. In the past, Uno said, traders and analysts believed that any slowdown was a transitory affair.
Federal Reserve staff have given the proposal of the central bank restricting the quantity of bonds which would be permitted to run off every month. It will be at first set at low level. The bond amount can be subsequently raised every three months. Rate futures of Federal funds are priced in approximately a 75 percent chance that Federal Reserve will increase rates in June. The futures moved down by about 80 percent during the start of the fourth week of May.
Prices of shares were influenced by a slower pace of tightening of policy. The Standard & Poor 500 closed at record highs.
When it came to the currency markets, euro traded up by 0.1 percent within Asia at $1.1225. The European Union currency bounced up from its May 24 low of $1.168. It is now within sight of $1,1268, the six and half months high set on May 23.