Asian stocks slip after Fed raises chance of rate hike
Posted May 19, 2016 12:08:20 AM.
Last Updated May 19, 2016 01:20:06 AM.
This article is more than 5 years old.
HONG KONG – Most Asian stock markets sank on Thursday after the Fed surprised investors by signalling that an interest rate hike is in the cards if economic conditions keep improving.
KEEPING SCORE: The benchmark Nikkei 225 index in Tokyo dipped less than 0.1 per cent to 16,636.67 while South Korea’s Kospi lost 0.5 per cent to 1,946.74. Hong Kong’s Hang Seng shed 0.3 per cent to 19,761.53 while the Shanghai Composite Index in mainland China gained 0.5 per cent to 2,820.43. Australia’s S&P/ASX fell 0.7 per cent to 5,319.00. Benchmarks in Taiwan, New Zealand and Southeast Asia also lost ground.
FED IN FOCUS: According to minutes of the Fed’s latest meeting, U.S. central bankers feel it would be time to raise rates at the next Fed meeting on June 14-15 if hiring and economic growth continue to strengthen and inflation keeps rising. The comments took investors by surprise and raise the prospect that some of the loose monetary policy that’s supported stock markets globally will be dialed back.
QUOTEWORTHY: “Markets have looked for government stimulus as a reason for investing rather than good company economics or fundamentals. Obviously therefore if there’s less chance of stimulus people are left wondering what to do,” said Andrew Sullivan, sales trader at Haitong Securities. “Yes it will be a shock to people, and I’m sure there will be a knee jerk reaction but the reality is we are nowhere near normal rates.”
WALL STREET: Major U.S. benchmarks were mostly little changed. The Standard and Poor’s 500 index eked out a 0.02 per cent gain to close at higher 2,047.63. The Dow Jones industrial average slipped less than 0.1 per cent to 17,526.62. The Nasdaq composite climbed 0.5 per cent to 4,739.12.
ENERGY: Benchmark U.S. crude oil extended losses, falling 70 cents, or 1.5 per cent, to $47.49 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 12 cents, or 0.2 per cent, to settle at $48.19 a barrel on Thursday. Brent crude, used to price international oils, dropped 75 cents, or 1.5 per cent, to $48.18 a barrel in London.
CURRENCIES: The dollar was marginally lower at 110.01 yen from 110.10 yen in late trading Thursday. The euro fell to $1.1224 from $1.1225.
