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Asia stocks dip as the Fed signals low rates for years

SINGAPORE — Stocks in major Asia-Pacific markets mostly traded lower Thursday morning as investors react to overnight developments from the U.S. Federal Reserve.

Mainland Chinese stocks were lower in early trade, with the Shanghai composite down 0.52% while the Shenzhen component declined 0.697%. Hong Kong’s Hang Seng index shed 0.56%.

Japan’s Nikkei 225 slipped 0.46% in morning trade while the Topix index dipped 0.25%. South Korea’s Kospi shed 0.63%.

In Australia, the S&P/ASX 200 traded slightly lower. The moves came as data showed seasonally adjusted employment in Australia increasing by 111,000 people between July and August — according to the country’s Bureau of Statistics. That compared against expectations of a 50,000 decline in a Reuters poll.

Meanwhile, the Straits Times index in Singapore bucked the overall trend regionally as it rose 0.28% after official data showed Thursday that August non-oil domestic exports rose 7.7% year-on-year. That was higher than expectations of a 3.7% increase for August in a Reuters poll.

Overall, the MSCI Asia ex-Japan index shed 0.54%.

Fed reaction watched

Investor reaction was watched, as members of the U.S. central bank’s policymaking committee indicated the overnight rate could stay close to zero for years to reach its 2% inflation target.

“With regard to interest rates, we now indicate that we expect it will be appropriate to maintain the current zero to 0.25% target range for the federal funds rates until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time,” said Fed Chairman Jerome Powell.

Looking ahead to other central bank developments, the Bank of Japan is also set to release its monetary policy statement at around 12:30 p.m. HK/SIN.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, sat at 93.281 after earlier touching a high of 93.398.

The Japanese yen traded at 105.06 per dollar following its strengthening yesterday from levels above 105.2 against the greenback. The Australian dollar changed hands at $0.729 after seeing levels around $0.733 yesterday.

Oil prices slipped in the morning of Asian trading hours, with international benchmark Brent crude futures down 0.36% to $42.07 per barrel. U.S. crude futures fell 0.52% to $39.95 per barrel.

Here’s a look at what’s on tap:

  • Japan: Bank of Japan’s monetary policy statement at 12:30 p.m. HK/SIN

— CNBC’s Fred Imbert contributed to this report.


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