Asia stocks slide after Fed keeps rates unchanged

Stocks in Asia were broadly lower in morning trade after the U.S. Federal Reserve left interest rates unchanged at its latest policy meeting.

The mainland China markets, which investors are watching closely as trade tensions between Washington and Beijing continue to weigh on sentiment, slipped into negative territory in their opening minutes of trade. The Shanghai composite shed 0.88 percent and the Shenzhen composite declined by 0.576 percent.

Over in Hong Kong, the Hang Seng index fell 1.42 percent in early trade.

The moves in China followed the country’s Consumer Price Index and Producer Price Index for the month of October coming in at 2.5 percent and 3.3 percent higher, respectively, compared to a year ago. Those numbers were in line with expectations from a Reuters poll.

One economist warned that relations between the U.S. and China could get more frosty now that the midterm elections stateside are over.

“The upshot is that there will be more noise and volatility on China,” TS Lombard’s chief U.S. economist, Steve Blitz, said in a note on Thursday, commenting on the post-election environment. Many Democrats, including Sen. Chuck Schumer, are “China hawks,” Blitz said.

In other Asian market news, Japan’s Nikkei 225 fell 0.72 percent while the Topix index saw losses of 0.2 percent after earlier seeing gains. South Korea’s Kospi was largely flat.

In Australia, the ASX 200 was lower by 0.41 percent in the morning, with the major sectors in mixed territory. Energy stocks fell by 1.47 percent while the heavily weighted financial subindex slipped into negative territory as it declined 0.11 percent.

Symbol
Name
Price

 

Change
%Change

NIKKEI

HSI

ASX 200

SHANGHAI

KOSPI

CNBC 100

Fed leaves rates unchanged

Overnight on Wall Street, the S&P 500 slipped 0.25 percent to close at 2,806.83 and the Nasdaq Composite saw declines of 0.5 percent to 7,530.88 by the closing bell. The Dow Jones Industrial Average, on the other hand, climbed 10.92 points to close at 26,192.22 — marking a four-session winning streak.

The moves came after the Fed kept interest rates unchanged, as was widely expected. The central bank said in a statement, however, that it expects “further gradual increases” in the overnight rate. The Fed also did not mention the volatility that has hit the market recently.

“This Fed meeting may be the catalyst (that) slows up the feel good factor that the markets have enjoyed over the last few sessions post the US midterm election results,” Rakuten Securities Australia said in a morning note.

“We’d seen a positive ‘risk on’ trading environment after the midterms (passed) largely in line with expectations, but with the Fed confirming that they are sticking with their well defined path we may see some of the investor concern returning to markets and some further downside for the stock indices over the next few sessions,” the note said.

The Fed has hiked rates three times this year and is forecast to raise one more time before year-end.

U.S. crude futures firm in bear market territory

U.S. crude futures steadied in the morning of Asian trade at $60.67 per barrel after settling in bear market territory in the previous session.

The global benchmark Brent crude futures contract, on the other hand, saw gains of 0.23 percent at $70.81 per barrel.

Crude prices have plunged over the last five weeks. They’ve been buffeted by October’s broader market slump, signs of deteriorating demand and rising output from key producers.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.640 after seeing lows around the 96 handle yesterday.

The Japanese yen was at 113.89 against the dollar after weakening from levels above 113.6 in the previous session. The Australian dollar traded at $0.7249 after seeing highs above $0.729 yesterday.

— CNBC’s Fred Imbert and Tom DiChristopher, along with Reuters, contributed to this report.


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