Asian stocks retreat on lack of direction from Fed, pandemic
SINGAPORE (AP) — Asian stock markets retreated Thursday after U.S. central bank policymakers made no firm decision on when to unwind their support measures for the economy.
Regional indices tracked losses on Wall Street. The lack of a directive from the Federal Reserve fueled worries over surging coronavirus infections caused by the delta variant, and the pandemic’s impact on consumer spending and jobs growth.
Tokyo’s Nikkei 225 slipped 0.7% to 27,394.43. The Kospi in South Korea lost 0.9% to 3,130.67 and the Shanghai Composite Index gave up 1% to 3,451.04.
Hong Kong’s Hang Seng was down 1.6% at 25,444.10. Sydney’s S&P-ASX 200 declined 0.4% to 7,474.00.
Losses were recorded throughout the Asia Pacific region except in New Zealand.
Minutes of the Fed’s July 27-28 meeting, released Wednesday, indicated that most officials in attendance thought it was “appropriate” to begin reducing the pace of asset purchases this year.
This is “provided that the economy were to evolve broadly as they anticipated,” according to the minutes.
The Fed’s purchases were meant to lower long-term interest rates and encourage borrowing and spending. It includes Treasury and mortgage bond buying, which now amounts to $120 billion a month. However, officials stopped short of setting a firm timeline.
“The minutes only emphasized the central bankers’ uncertainty about the path of the economy and monetary policy heading into 2022,” Matt Weller, global head of research at FOREX.com and City Index, wrote in a note.
“Taken together, the initial read through of the minutes paints a mixed picture: while most Fed policymakers are expecting to start tapering this year, there were still several who would prefer to wait for next year,” he said.
The focus has shifted to next week’s Jackson Hole Symposium. Traders will scrutinize Fed Chair Jerome Powell’s keynote speech for hints about the timing of a taper announcement, Weller added.
Stocks fell broadly on Wall Street on Wednesday. The benchmark S&P 500 shed 1.1% to 4,400.27 in its biggest decline since mid-July.
Technology, health care, financial and industrial companies were the biggest losers. Only the index’s consumer discretionary sector rose as investors bid up shares in Lowe’s and other big retailers that reported better-than-expected quarterly results.
The Dow Jones Industrial Average fell 1.1% to 34,960.69. The Nasdaq composite lost 0.9% to 14,525.91. Small company stocks also fell, sending the Russell 2000 index down 0.8% to 2,158.78.
In energy markets, benchmark U.S. crude fell $1.16 to $64.30 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price standard for international oils, shed $1.05 to $67.18 per barrel in London.
A surprise rise in US gasoline inventories has more than offset a drop in its crude stockpile, Venkateswaran Lavanya of Mizuho Bank said.
“This underpins concerns that delta risks may be getting in the way of travel,” she added.
Meanwhile, the dollar advanced to 110.17 yen from Wednesday’s 109.76 yen. The euro slipped to $1.1672 from $1.1721.
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