I. Yesterday's News
International News
1. The Federal Reserve's return to higher interest rates could lend a hand to beleaguered counterparts in Japan and Europe and signal the end of a long cycle of monetary stimulus across Asia, as central banks from Beijing to Ankara to London reacted on Thursday to the U.S. policy change. China, the world's second-largest economy, responded Thursday by raising its key policy rates to head off a weakening of its currency. That same reason prompted central banks in Saudi Arabia, the United Arab Emirates, Kuwait and Bahrain to tighten policies within 90 minutes of the Fed's announcement. While central banks in Turkey, Swiss, Norway and Indonesia kept policy steady.

2. Dutch center-right Prime Minister Mark Rutte fought off the challenge of anti-Islam and anti-EU rival Geert Wilders to score an election victory that was hailed across Europe by governments facing a rising wave of nationalism. Geert Wilders congratulated Dutch Prime Minister Mark Rutte on his victory, promising firm parliamentary opposition. With 95 percent of votes counted, Rutte's VVD Party had won 33 of parliament's 150 seats, down from 41 at the last vote in 2012. Wilders was second with 20, and the CDA and centrist Democrats 66 tied for third with 19 each.

3. A Bank of England policymaker surprised investors by breaking ranks and voting to raise interest rates and some others said it would not take much for them to follow suit, the BoE said on Thursday, signalling a potentially bigger split soon. Kristin Forbes, who is due to leave the BoE in June, cast the sole vote in favour of raising Bank Rate to 0.5 percent, the first Monetary Policy Committee split since last July. The other eight MPC members all opted to keep rates at 0.25 percent to help the economy as Britain prepares to leave the European Union. Sterling jumped on the news. The yield on 10-year British government bonds hit their highest level in a month.

4. As expected, the BOJ maintained on Thursday its short-term interest rate target of minus 0.1 and a pledge to guide the 10-year government bond yield at around zero percent via aggressive asset purchases. It also kept intact a loose pledge to maintain the pace of its annual increase in Japanese government bond (JGBs) holdings, which is 80 trillion yen ($706 billion). BOJ Governor Haruhiko Kuroda said at his post-meeting news conference, “Japan's economy is recovering moderately. The momentum for inflation to accelerate to 2 percent remains in place but lacks strength.” The BOJ will continue to promote powerful monetary easing under the yield curve control framework to achieve its price target at the earliest date possible as the trend inflation has been moving sideways, he said, adding that, “I don't think we need to think about (deepening negative rates) now. If we need to expand stimulus, I won't rule out the chance of deepening negative interest rates.”

5. The Swiss National Bank stuck to its ultra-loose monetary policy on Thursday, as it awaits the outcome of elections across Europe which could trigger an upsurge in demand for the safe-haven Swiss franc should nationalists perform well. The central bank kept its target range for three-month Swiss franc Libor at -1.25 percent to -0.25 percent while it kept the rate it charges on sight deposits at -0.75 percent, as expected in a poll of economists.

6. The European Central Bank will decide at a later time whether to raise interest rates before or after ending its bond purchase programme, ECB policymaker Ewald Nowotny told German daily Handelsblatt. The Austrian central bank governor said the ECB could hike its remuneration of bank deposits, currently below zero, before the main rates at which it lends to banks.

Domestic News
7. China's central bank raised the borrowing rate on its medium-term lending facility (MLF) and standing lending facility (SLF) short-term loans after the Federal Reserve raised U.S. rates overnight, saying it was a bid driven by market force to raise interest rates and tighten monetary policy. Amid China's economic recovery, the moderate adjustment in monetary policy provided a support to fundamentals, and would keep nominal interest spread between China and U.S. at an appropriate level, lift the cost for shorting yuan, and stave off capital outflows and keep the yuan currency stable.

8. China is considering linking the debt markets of Hong Kong and the mainland this year to reinforce the connection and cooperation between the two markets in infrastructure, and facilitate investors' involvement in bond market. Proposal on the programme dubbed “Bond Connect” will be released at proper time.

9. China National Advanced Payment System (CNAPS) operated smoothly in 2016, with social funds expanding and payment business growth steadying, China's central bank said in a report. Foreign currency payment system shrank slightly at home, cross-border payment system in yuan ran smoothly, while mobile payment and online payment inter-bank settlement system rose rapidly.

10. The Hong Kong Monetary Authority on Thursday raised the base rate charged through its overnight discount window by 25 basis points to 1.25 percent, following a similar move by the U.S. Federal Reserve. Hong Kong banks are not likely to follow the US this time, suggesting the mortgage rates in housing market would stay put for now. Norman Chan, the chief executive of the Hong Kong Monetary Authority, said, “The public should not underestimate the impact of US dollar and Hong Kong dollar interest rate normalization on Hong Kong's asset markets.”

II. Market Overview
FX
1. Global Market
The dollar dropped to a five-week low against a basket of currencies on Thursday, still reeling from the previous session, when a statement from the U.S. Federal Reserve failed to signal a much faster pace of monetary policy tightening. The dollar index fell 0.4 percent to 100.37. Against the yen, the dollar slipped to 113.28 yen, down 0.1 percent, after earlier falling to a two-week trough. The euro rose to a six-week high against the greenback and was last at $1.0751, up 0.2 percent.

2. Home Market
China's yuan gaped down against the dollar in a tight range on Thursday, with midpoint rate posing the largest one-day gains in almost two months following a choppy trading in overnight dollar index. Market risks had almost been priced in after the close of China's Two sessions and the Federal Reserve's policy meeting. Investors' bids and big banks' appetite will dominate forex market in coming sessions. The spread between onshore and offshore forex prices are expected to expand due to strong demand from domestic investors.

Precious Metals
Gold rallied for the second straight session on Thursday, climbing to its highest level in over a week after the U.S. central bank signaled only gradual rate tightening and the dollar slid to its lowest in five weeks. Spot gold was last at $1,226.40 an ounce, after touching $1,233.13, the highest since March 6. U.S. gold futures for April delivery settled up 2.2 percent at $1,227.10.

Commodities
1.Crude Oil
Oil prices slipped on Thursday, as support from a weaker dollar was offset by U.S. crude inventories near record high levels that again raised concerns whether OPEC-led output cuts were starting to drain a global glut. Brent crude ended the session 7 cents lower at $51.74 a barrel. U.S. light crude settled 11 cents lower at $48.75 a barrel, but still above the three-month low hit on Tuesday.

2.Base Metals
Copper rose for a fifth session on Thursday as stoppages at three of the world's biggest mines raised supply concerns and a weaker dollar made metals cheaper for holders of foreign currencies. Three-month copper on the London Metal Exchange closed up 0.7 percent at $5,908 a tonne. The metal used in power and construction has gained 4.5 percent since touching an eight-week low of $5,652 on March 9.

U.S. Treasuries
1. U.S. bonds
U.S. Treasury yields rose on Thursday from more than one-week lows on the view that they had fallen too sharply in the prior session after the Federal Reserve maintained its outlook for only a gradual pace of interest rate increases this year. Benchmark 10-year Treasury notes were last down 5/32 in price, with yields rising to 2.524 percent from 2.504 percent late on Wednesday. U.S. 30-year bonds fell 19/32 in price, and yields rose to 3.134 percent from 3.102 percent. Yields hit a session high of 3.156 percent in afternoon U.S. Trading. Two-year notes, which are considered most vulnerable to Fed policy, were down slightly in price, while yields increased to 1.324 percent from 1.316 percent.

2. Chinese bonds
China's interbank money rates surged, following moderate move from the Federal Reserve. China's central bank raised the borrowing rate on its medium-term lending facility (MLF) loans, limiting gains of the cash bonds at one point. But market morale recovered soon, sending the benchmark 10-year government bond futures up by 1.2 percent.

Stock Market
1. U.S. Equities
U.S. stocks slipped on Thursday pressured by healthcare shares as traders cashed in gains from one of the best performing sectors so far this year. Proposals in President Donald Trump's budget signaled higher regulatory costs for the sector and a cut in federal funding for medical research. The Dow Jones Industrial Average fell 15.55 points, or 0.07 percent, to close at 20,934.55, the S&P 500 lost 3.88 points, or 0.16 percent, to 2,381.38 and the Nasdaq Composite added 0.71 point, or 0.01 percent, to 5,900.76.

2. Hong Kong Equities
Hong Kong's benchmark Hang Seng Index closed at a 19-month high on Thursday after the Federal Reserve hiked interest rates, as expected, but signalled no pick-up in the pace of tightening. Investors had feared the Fed was considering faster hikes that buoy the dollar and lure funds out of emerging markets and back to the United States. The Hang Seng index ended up 2.1 percent at 24,288.28 points, its highest close since early August, 2015. The China Enterprises Index gained 2.5 percent to 10,526.46 points, in its best day since May 25, 2016.

3. China Equities
The Shanghai Composite Index rose to a 3-1/2-month high in heavy volume, extending its gains to the fourth consecutive day. Market concerns eased after the Federal Reserve raised interest rates as expected, and signalled no further tightening. Individual stocks climbed across the board as major indexes made breakthrough, suggesting retaining steam in coming sessions. The Shanghai Composite Index closed up 27.18 points or 0.84 percent to 3,268.94.