Asia stocks slip after Fed signals more rate hikes in store

By , on May 4, 2017


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HONG KONG – Most Asian stock markets slipped Thursday after a lacklustre day on Wall Street as the Fed used its latest assessment of the U.S. economy to signal that more interest rate increases are coming.

KEEPING SCORE: South Korea’s Kospi added 0.8 per cent to 2,236.29 while other major benchmarks across Asia fell, with Hong Kong’s Hang Seng losing 0.4 per cent to 24,593.79 and the Shanghai Composite on mainland China dipping 0.1 per cent to 3,132.67. Australia’s S&P/ASX 200 fell 0.3 per cent to 5,873.20. Singapore’s benchmark fell but indexes in other Southeast Asian countries and Taiwan rose. Japan’s market remained closed for a holiday.

FED IN FOCUS: U.S. interest rates remained unchanged after the latest policy meeting by the Federal Reserve, which also said it expects the U.S. economy, the world’s biggest, to start growing faster. The remarks by the Federal Open Market Committee contained no surprises and provided further support for another widely expected Fed interest rate rise, which could come in June. The Fed has signalled it plans to continue gradually raising interest rates that have been at ultralow levels for years, gently removing the stimulus that has helped fuel an extended stock rally.

MARKET INSIGHT: “The FOMC meeting provided few surprises and that’s how the Federal Reserve likes things,” said Chris Weston, chief market strategist at IG in Melbourne. “They are part of the reasoning why the world has a love affair with selling volatility.”

BANK EARNINGS: HSBC posted a 12 per cent increase in quarterly pretax profits as improved trading and rising interest rates helped support revenue at the London-based global bank. The figures are adjusted for one-off items. Net profit, however, slipped 22 per cent to $2.7 billion.

WALL STREET: The Standard & Poor’s 500 index slipped 0.1 per cent to 2,388.13. The Dow Jones industrial average rose a fraction to 20,957.90. The Nasdaq composite sank 0.4 per cent to 6,072.55.

ENERGY: U.S. benchmark crude futures shed 14 cents to $47.68 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 16 cents to settle at $47.82 a barrel on Wednesday. Brent crude, used to price international oils, lost 14 cents to $50.65 a barrel in London.

CURRENCIES: The dollar rose to 112.80 yen from 112.64 yen in late trading Wednesday. The euro rose to $1.0893 from $1.0887.