The pound is in focus as Britain goes to the polls in a key general election (Ben STANSALL)

Hong Kong (AFP) – Asian equities mostly rose and the dollar was subdued Thursday after the Federal Reserve indicated it was unlikely to change interest rates throughout next year, while the pound was in focus as the UK prepares to vote in a general election.

Investors are also tracking developments in the China-US trade talks, with nervousness setting in as a deadline for fresh US tariffs on Chinese goods approaches and no sign yet that they will be delayed.

While negotiations between the economic superpowers is the main focus on trading floors, the Fed’s latest policy announcement took the attention Wednesday.

The central bank, which has cut borrowing costs three times this year, said after a two-day meeting it would hold them for now and set its sights on low inflation and the global economy.

The comments suggest it will stand pat throughout 2020, while Kerry Craig, at JP Morgan Asset Management, said “a sizeable turn in the economic and inflation outlook in either direction will be required for markets to contemplate any sort of move in interest rates”.

The prospect of rates remaining low for some time lifted Wall Street, and most of Asia followed suit.

Hong Kong, Seoul and Taipei each piled on more than one percent, Tokyo added 0.2 percent by the break, Singapore jumped 0.8 percent and Jakarta rose 0.3 percent.

However, Shanghai dipped 0.2 percent, while Sydney slipped 0.7 percent and Manila dropped 0.5 percent.

– ‘Unpredictable’ election –

There was little fresh news on the trade talks. The general consensus is for Washington and Beijing to eventually reach an agreement as part of a wider deal to end their long-running spat.

However, while both sides have played up the good work so far, there are growing worries that the US will not cancel or delay fresh levies due on December 15, which observers fear could block any further progress in the negotiations.

The dollar faced selling pressure from across the board as dealers contemplate the lower-rate environment, with higher-yielding, riskier assets such as the Australian dollar, South Korean won and Mexican peso clocking up big gains.

The pound was also benefitting, though traders have grown a little nervous after a huge and respected poll suggested Prime Minister Boris Johnson’s forecast majority might not be as big as expected after Thursday’s general election.

The YouGov study jolted confidence that the ruling Conservatives would win a big enough mandate to push through the PM’s Brexit deal and avert a no-deal EU divorce. The latest readings have revived the chances of another hung parliament that would sow further uncertainty.

“Broadly speaking, we believe that markets have gone a bit far ahead of themselves in pricing a robust Tory majority,” Mark Dowding, at BlueBay Asset Management, said.

“This election remains pretty unpredictable and although a majority for Johnson seems the most likely outcome, we don’t think we can rule out surprises on Thursday evening.”

– Key figures around 0300 GMT – 

Tokyo – Nikkei 225: UP 0.2 percent at 23,443.07 (break)

Hong Kong – Hang Seng: UP 1.2 percent at 26,958.63

Shanghai – Composite: DOWN 0.2 percent at 2,919.07

Pound/dollar: UP at $1.3208 from $1.3196 at 2150 GMT

Euro/pound: DOWN at 84.32 pence from 84.33 pence

Euro/dollar: UP at $1.1136 from $1.1129

Dollar/yen: DOWN at 108.54 yen from 108.56 yen

West Texas Intermediate: UP 11 cents at $58.87 per barrel

Brent North Sea crude:UP 22 cents at $63.94 per barrel

New York – Dow: UP 0.1 percent at 27,911.30 (close)

London – FTSE 100: FLAT at 7,216.25 (close)

— Bloomberg News contributed to this story —

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.