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Daily Scan: Asian stocks mixed, bonds rally as Fed stands pat on interest rates

By NexChange
Capital Markets

Updated throughout the day

September 18

Good evening everyone. Well its seems that instead of quelling uncertainty over the global economy, the Federal Reserve decision to stand pat on interest rates was more confusing than calming. Asian stock markets went 'huh?' and bond markets rallied. The Shanghai and Hong Kong indices rose a modest 0.38% and 0.30%, respectively. Markets in Jakarta, Kuala Lumpur, and Tokyo were all down. This is how the major Asian markets looked at the close of play:

Jakarta Comp: -0.32%
KLSE Comp: -1.01%
Nikkei 225: -1.96%
Straits Times: +0.29%
Seoul Comp:+0.98%

The Financial Times noted core sovereign bonds benefited from anxiety at the Fed that global economies might be struggling to grow. Industrial commodities struggled for traction. The FTSEurofirst 300 index is off 0.7%, while US index futures indicate the S&P 500 will dip when the starting bell ring in New York.

Here’s what else you need to know:

Danke, Janet. With Yellen & Co. keeping rates unched, European bond yields are starting to drop like flies. German 10-year bund yields have fallen 0.09% to 0.688%, while Portuguese and Italian 10-year bond yields slide to 2.532% and 1.793% respectively. Grazie mille, Signora Yellen! Financial Times (paywall)

1MDB “misplaces” another $1 billion. As if it wasn’t bad enough that $700 million of its cash went into the prime minister’s accounts and that $1.4 billion due to a Middle Eastern counterparty vanished into thin air, Malaysia’s state fund 1MDB is now in the hot seat after a reported $993 million payment it made to the International Petroleum Investment Co. – Abu Dhabi’s sovereign fund – somehow never reached the emirate. Wall Street Journal

Hungary begins fencing off its borders. In an effort to stem the tide of migrants, Hungary has begun erecting a fence along its border with Croatia as well as with Serbia. Prime Minister Viktor Orban called it a move that will prove “to the people, ourselves and the whole world that even as a flood [of migrants] is heading toward Europe, this tide can be curbed, channeled in an organized way, and checked for [security] risks if everyone did their job.” Wall Street Journal

China relaxes rules for trafficked kids. China has relaxed rules for the legal adoption of trafficked or abandoned Chinese children, state media reported on Friday, as the government works to combat the pervasive problem of child trafficking. Channel News Asia

Smog smothered Indonesia rejects Singapore’s help. Indonesia has again declined Singapore's offer of help in fighting haze-causing fires, with Environment and Forestry Minister Siti Nurbaya Bakar saying Indonesia is trying to handle the situation on its own.

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