Fed’s Powell opens door to potential rate cuts at Jackson Hole
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
* Traders around the world brace for British election
* Trump to meet advisors on China tariffs
* Dovish Powell comments hurt dollar
* Treasury yields rebound in Asia
By Stanley White
TOKYO, Dec 12 (Reuters) - Asian stocks edged higher on
Thursday after the Federal Reserve signalled rate settings were
likely to remain accommodative but the imminent UK election and
a deadline for Sino-U.S. trade talks kept investors cautious.
Capping broader gains was a fall in oil prices after data
showed an unexpected increase in U.S. crude inventories, which
hit some energy stocks in the region.
The Fed kept interest rates unchanged, as expected, at its
policy meeting on Wednesday but indicated interest rates would
remain on hold, which nudged Wall Street stocks higher.
That helped MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS to rise 0.2%. Japan's Nikkei stock
index .N225 climbed 0.11% and U.S. stock futures ESc1 rose
0.06%. Australian shares .AXJO were down 0.29%, however,
weighed by the energy sector after the fall in oil prices.
"The Fed's accommodative stance does support equities, but
the chance of a disruptive election outcome in Britain is very
real," said Michael McCarthy, chief market strategist at CMC
Markets in Sydney.
"You also have the U.S.-China trade problem. We're likely to
see subdued trading and some investors make lock in profits as
the day progresses."
The S&P 500 .SPX rose 0.29% on Wednesday after the Fed's
rate decision, which included enough dovish tones to cheer
markets.
Traders are bracing for a series of make-or-break events
over the next few days that have the potential to cause huge
swings in financial markets for months to come.
Sterling traded near the highest in more than two years
versus the euro and close to a eight-month high versus the
dollar before voting begins in an election that will determine
whether Britain exits the European Union in an orderly fashion.
Polls show the Conservatives' lead shrinking ahead of an
election starting later Thursday, which could jeopardise chances
of a smooth Brexit.
Exit polls for Britain's election will begin around 2200 GMT
Thursday after voting closes, then official results will begin
to trickle in.
UK Prime Minister Boris Johnson's ruling Conservative Party
is running on a pledge to enact a swift split from the EU,
ending more than three years of uncertainty.
Traders say a hung parliament or a victory for the main
opposition Labour Party could cause huge disruptions because
Labour is promising another referendum on membership of the
bloc. Against the euro, sterling EURGBP=D3 was little changed at
84.36 pence, close to the highest since May 2017. The pound
GBP=D3 traded at $1.3200, just shy of its highest since March.
In trade war news, U.S. President Donald Trump is expected
to meet Thursday with top advisers to discuss tariffs on nearly
$160 billion of Chinese consumer goods that are scheduled to
take effect on Dec. 15, three sources told Reuters. Trump is expected to go ahead with the tariffs, a separate
source told Reuters, which could scuttle efforts to end a
17-month long trade war between the world's two-largest
economies.
The dollar index .DXY against a basket of six major
currencies traded at 97.413. On Wednesday it fell to a
four-month low after Powell it would take a significant pick-up
in inflation to cause the Fed to raise rates.
Treasury yields initially fell in reaction to Powell's
comments, but they rebounded slightly in Asia. The yield on
benchmark 10-year Treasury notes US10YT=RR rose to 1.7965%.
U.S. crude futures CLc1 rose 0.26% to $58.91 a barrel in
Asia. A report by OPEC released on Wednesday suggested that oil
markets are tighter than previously thought. Traders are also focused on state oil company Saudi Aramco
2222.SE , whose shares surged the maximum permitted 10% above
their IPO price on their Riyadh stock market debut on Wednesday,
making it the world's most valuable listed company.
(Editing by Sam Holmes)