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Asian Markets Mostly Lower On Fed Interest Rate Outlook

asiadown march19 16jun21 lt

Asian stock markets are trading mostly lower on Thursday, following the negative cues overnight from Wall Street as the Fed's latest economic projections now point the first post-pandemic interest rate hike in 2023, well ahead of the projected timeframe. Seven officials expect a rate hike as early as 2022. The markets also remain tense amid the continuing high number of infections in most markets. Asian markets closed mostly lower on Wednesday.

The Australian stock market is slightly lower on Thursday, retreating from record all-time highs and snapping a winning streak of four previous sessions, with the benchmark S&P/ASX 200 staying just below the 7,400 level off all-time highs, as mining, technology and energy stocks fell, offsetting gains in the financial sector. The cues overnight from Wall Street were also negative after the US Fed tipped an earlier-than-expected rise in interest rates.

Meanwhile, the Australian Reserve Bank governor Phil Lowe sounded a warning to the nation's lenders to maintain borrowing standards given soaring house prices.

The benchmark S&P/ASX 200 Index is losing 7.90 points or 0.11 percent to 7,378.10, after hitting a low of 7,341.90 earlier. The broader All Ordinaries Index is down 12.70 points or 0.17 percent to 7,620.70. Australian markets ended slightly higher on Wednesday.

Among major miners, BHP Group and Rio Tinto are losing almost 2 percent each, while Fortescue Metals is lower by more than 3 percent. Mineral Resources is down more than 2 percent and OZ Minerals is declining almost 4 percent.

Oil stocks are lower. Oil Search is edging down 0.4 percent, Woodside Petroleum is down almost 3 percent, Beach Energy is declining almost 2 percent and Santos is lower by more than 2 percent Origin Energy is down almost 1 percent.

Among Tech stocks, Appen, Xero and WiseTech Global are edging down 0.3 percent each, while Afterpay is losing almost 1 percent.

Among the big four banks, Westpac and ANZ Banking are gaining more than 1 percent each, while Commonwealth Bank and National Australia Bank are adding almost 1 percent each.

Gold miners are lower after gold prices tumbled overnight. Evolution Mining is losing more than 3 percent and Northern Star Resources is down more than 5 percent, while Resolute Mining and Gold Road Resources are lower by more than 2 percent each. Newcrest Mining is down almost 2 percent.

In other news, shares in Coles are losing more than 4 percent after the supermarket giant told investors it plans to grow its business and recoup the recent near 1.3 percent drop in market share through a range of new investments, with the company set to spend an additional $1.4 billion next financial year on top of the $1.1 spent this.

Shares in Whitehaven Coal are plummeting more than 9 percent after the coal miner trimmed its full-year production guidance due to a disrupted performance at the Narrabri mine in NSW, and a softer performance at Gunnedah. It has already cut its sales guidance twice this year.

Kerry Stokes-controlled media firm Seven West Media said it expects to beat consensus earnings figures for the full year aided by stronger audience numbers and a rebound in advertising revenue. The stock is surging more than 10 percent.

In economic news, the unemployment rate in Australia came in at a seasonally adjusted 5.1 percent in May, the Australian Bureau of Statistics said on Thursday, well below expectations for 5.5 percent, which would have been unchanged from the April reading. The Australian economy added 115,200 jobs last month, blowing away forecasts for an increase of 30,000 following the loss of 30,600 in the previous month. The participation rate was 66.2 percent, exceeding expectations for 66.1 percent and up from 66.0 percent a month earlier.

In the currency market, the Aussie dollar is trading at $0.763 on Thursday.

The Japanese stock market is sharply lower on Thursday, extending the losses of the previous session, with the benchmark Nikkei 225 falling below the 29,000 markl, following the negative cues overnight from Wall Street after the US Fed tipped an earlier-than-expected rise in interest rates. Meanwhile, the losses are capped as the Japanese government is set to decide later in the day to end the COVID-19 state of emergency in most prefectures on Sunday on a steady decline in COVID-19 infections.

The benchmark Nikkei 225 Index closed the morning session at 28,906.75, down 384.26 points or 1.31 percent, after hitting a low of 28,875.39 earlier. Japanese shares ended notably lower on Wednesday.

Market heavyweight SoftBank Group is losing almost 2 percent and Uniqlo operator Fast Retailing is edging down 0.5 percent. Among automakers, Toyota is flat, while Honda is edging down 0.4 percent. Mazda is gaining almost 2 percent.

In the tech space, Advantest is losing more than 3 percent, Screen Holdings is down more than 2 percent and Tokyo Electron is declining almost 1 percent.

In the banking sector, Sumitomo Mitsui Financial and Mitsubishi UFJ Financial are gaining more than 1 percent, while Mizuho Financial is up almost 1 percent.

The major exporters are mixed. Mitsubishi Electric is losing more than 1 percent, Panasonic is down almost 2 percent and Sony is losing more than 2 percent, while Canon is edging up 0.2 percent.

Among the other major losers, Komatsu is losing almost 5 percent and M3 is declining more than 3 percent, while TDK, Chugai Pharmaceutical, Kyocera, Kawasaki Kisen Kaisha, Suzuki Motor, Isuzu Motors and Toho Zinc are down almost 3 percent each. Hitachi Construction Machinery, Taisei, FUJIFILM Holdings and Mitsui O.S.K. Lines are lower by more than 2 percent.

Conversely, T&D Holdings is gaining more than 4 percent, while Mitsubishi Chemical Holdings and Dai-ichi Life Holdings are adding more than 3 percent each. Japan Exchange Group and Z Holdings are up almost 3 percent each, while Dowa Holdings, Amada and Mitsubishi Heavy Industries are rising more than 2 percent each.

In the currency market, the U.S. dollar is trading in the higher 110 yen-range on Thursday.

Elsewhere in Asia, New Zealand, Malaysia, Taiwan, Indonesia, South Korea and Singapore are all lower by between 0.1 and 0.5 percent. Meanwhile, China and Hong Kong are bucking the trend to be higher between 0.1 and 0.2 percent.

On Wall Street, stocks finished Wednesday's trading mostly lower, reflecting a negative reaction to the Federal Reserve's highly anticipated monetary policy announcement. With the drop on the day, the Nasdaq and the S&P 500 pulled back further off Monday's record closing highs.

The major averages climbed well off their lows of the session but still closed in negative territory. The Dow slid 265.66 points or 0.8 percent to 34,033.67, the Nasdaq dipped 33.17 points or 0.2 percent to 14,039.68 and the S&P 500 fell 22.89 points or 0.5 percent to 4,223.70.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index edged down by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both crept up by 0.2 percent.

Crude oil futures failed to hold early gains and settled roughly flat on Wednesday, despite data showing a larger than expected drop in crude inventories last week. West Texas Intermediate Crude oil futures for July ended up by $0.03 at $72.15 a barrel after peaking earlier at $72.99.

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