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Asian Shares Fall After Fed Comments

stockmarkets jan18 26jun19 lt

Asian stocks followed Wall Street lower on Wednesday after comments from Federal Reserve officials tempered rate cut hopes. Investors also awaited the outcome of the G20 summit this week for directional cues.

Fed Chairman Jerome Powell pushed back against pressure from President Donald Trump to cut interest rates, saying that monetary policy should not overreact to any individual data point or short-term swing in sentiment.

Separately, St. Louis Fed President Jim Bullard, a well-known policy dove, said that a 50 basis point rate cut in July would be too much.

Chinese shares ended lower, dragged down by financials as caution prevailed ahead of the meeting between Trump and Chinese President Xi Jinping

The benchmark Shanghai Composite Index slipped 5.79 points or 0.2 percent to 2,976.28, although Hong Kong's Hang Seng Index inched up 36.00 points or 0.1 percent at 28,221.98.

Japanese shares fell after Powell said the U.S. central bank is "insulated from short-term political pressures," dampening market hopes the central bank will deliver a half-point interest rate cut in July.

The Nikkei 225 Index declined 107.22 points or 0.5 percent to 21,086.59, while the broader Topix ended 0.6 percent lower at 1,534.34.

Exporters ended broadly lower, with Honda Motor declining 1.3 percent and Canon losing 2.6 percent. Mitsubishi Motors gave up 1.8 percent after saying it would relocate its North American headquarters from California to Tennessee.

On the other hand, Tokyo Electron surged up 2.2 percent and Advantest rallied 3.5 percent after Micron Technology expressed optimism that good demand for DRAM will return to healthy year-over-year growth in the second half of calendar 2019.

Australian markets fell slightly as Fed officials played down expectations of aggressive rate cuts. The benchmark S&P/ASX 200 Index dropped 17.50 points or 0.3 percent to 6,640.50, while the broader All Ordinaries Index ended down 18.40 points or 0.3 percent at 6,716.10.

Financials paced the declines, with banks ANZ, NAB and Westpac ending down between 0.6 percent and 1 percent.

Mining heavyweights BHP and Rio Tinto ended mixed, while gold miners Newcrest, St Barbara and Northern Star fell around 1 percent.

Seoul stocks ended a choppy session roughly flat. The Kospi swung between gains and losses before ending the session marginally higher at 2,121.85. Market heavyweight Samsung Electronics rose 0.2 percent, while chipmaker SK Hynix soared 3.3 percent.

New Zealand shares finished marginally lower after the country's central bank left its key interest rate unchanged at a record low but hinted a rate cut over time to underpin subdued economic growth.

U.S. stocks tumbled overnight as simmering trade concerns and disappointing housing and consumer confidence data dented sentiment.

The Dow Jones Industrial Average shed 0.7 percent and the S&P 500 lost 1 percent to end lower for the third straight session, while the tech-heavy Nasdaq Composite plunged 1.5 percent.

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