While the Fed held interest rates as had been expected by pretty much everyone, the statement appears to have spooked traders. Prior to the meeting US indices had been trading moderately higher, but turned decidedly south on the announcement driving downward through the end of the day, breaking support and sending downward momentum toward today’s Asia Pacific markets. The Fed’s statement was mixed to moderately dovish. While recognizing strong employment growth, the Fed noted the overall economy has slowed a bit and that inflation is running below target due to weak oil prices. The FOMC also indicated that it is closely monitoring global developments and that the current economy only warrants gradual interest rate increases. The street appears to have taken this news as a warning on the health of the US and global economy, impacting confidence a bit in the short term. Initially, support levels like 16,000 on the Dow held but once those gave way, the floodwaters rushed in and the bears overwhelmed the bulls. Earnings reports also had a big impact on trading in individual stocks with Textron down 10.4%, Boeing falling 8.3% and Apple retreating 5.1%. In contrast, rebounding commodity prices helped US resource stocks with Freeport rallying 16.1%, Consol Energy gaining 11.0% and Newmont rising 4.1%. In Canada, base metal miner First Quantum rise 4.8% while Rogers Communications earnings miss knocked its stock back 5.3%. US Dollar action has been mixed on the news, falling relative to EUR, JPY and gold but rising against GBP and resource currencies like AUD, NZD and CAD. Crude oil has been all over the place today but overall remains well supported. WTI went up following a higher than expected US inventory build meaning that even through the bears had every reason to take charge, they weren’t able to muster up any strength indicating exhaustion, and providing more evidence to indicate oil has turned the corner. NZD has gone into another nosedive following today’s RBNZ decision and statement. Although the central bank maintained the Official Cash Rate at 2.50% as expected, Governor Wheeler’s statement came off as dovish, warning about the impact of a China slowdown on export prices, hinting at the potential for additional rate cuts this year and talking down the dollar again. Looking forward, today’s Asia Pacific trading could be split between the reaction to the FOMC and RBNZ decisions and positioning ahead of tomorrow’s basket of key Japanese economic indicators and a Bank of Japan meeting. JPY weakening relative to EUR suggests that despite official denials many traders think more stimulus could be coming this meeting or next with inflation running below target. The possibility and timing of more stimulus from Governor Kuroda remains an open question, and with sentiment split, we could see significant action on the news as whatever happens a significant faction of traders could find themselves scrambling. Tomorrow morning, GBP could be active around the UK GDP report, while US markets could respond to the ongoing flurry of earnings reports and preparations for Friday’s US GDP and Chicago PMI reports, plus month-end squaring off of positions. Corporate News Facebook is due to report after the US close today. Economic News Significant announcements released overnight include: US interest rate and FOMC statement 0.50% upper bound no change expected NZ interest rate and RBNZ statement 2.50% no change expected US new home sales 544K vs street 500K US DOE crude oil inventories 8.3 mmbbls vs street 4.1 mmbls US DOE gasoline inventories 3.4 mmbbls vs street 0.9 mmbbls Upcoming significant economic announcements include: (Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore) 8:45 am AEDT NZ trade balance street ($131M) 10:50 am AEDT Japan retail sales street 0.2% 11:30 am AEDT Australia export prices street (3.9%) 1:30 pm AEDT Singapore unemployment rate street 2.0% 8:00 am GMT Spain retail sales street 3.0% 8:00 am GMT Spain unemployment rate street 21.2% 8:30 am GMT Sweden unemployment rate street 6.4% 8:30 am GMT Sweden trade balance street SEK 0.0B 8:30 am GMT Sweden retail sales street 4.6% 9:30 am GMT UK Q4 GDP street 1.9% vs previous 2.1% 11:00 am GMT UK CBI sales street 18 1:00 pm GMT Germany consumer prices street 0.4% 8:30 am EST US jobless claims street 281K 8:30 am EST US durable goods orders street (0.7%) 8:30 am EST US durables ex transport street (0.1%) 10:00 am EST US pending home sales street 4.8% 10:30 am EST US natural gas storage street (208 BCF) 11:00 am EST US Kansas City Fed street (10)