Asian stocks open lower after Fed’s hawkish tone
2 min read . Updated: 15 Dec 2022, 07:06 AM IST
PremiumAfter signs of US Federal reserve being hawkish this time, Asian stocks followed the US equities trend and were trading lower
Asian stocks followed US equities lower after the Federal Reserve signaled interest rates will climb higher than anticipated next year.
Japanese, South Korean and Australian shares slid Thursday, while futures for Hong Kong eked out a gain. Contracts for the S&P 500 inched higher in Asia after the benchmark snapped a two-day rally Wednesday in a volatile session that saw shares end off their lows.
Fed Chair Jerome Powell said the central bank had a “ways to go" in its campaign to rein in inflation. Policy makers projected rates would end next year at 5.1%, a higher level than previously indicated and well above market projections.
“The Fed was decidedly more bearish than expected," said Karen Jorritsma, head of Australian equities at RBC Capital Markets. “They will stay the course on inflation, making a hard landing almost a certainty."
Treasury yields made small gains in Asia after fluctuating during the US session after the Fed’s hawkish decision and Powell’s comments. The relatively muted moves indicate bond market doubts about the Fed’s staying power in raising and holding rates higher for longer.
The Federal Open Market Committee raised its benchmark rate by 50 basis points to a 4.25% to 4.5% target range. Powell left the door open to a similar hike at the next meeting in February or a step down, while pushing back on bets for reversing course next year.
Swaps traders expect policy makers to continue on the slower path.
On Thursday’s economic front in Asia, China is due to release a raft of data including industrial production and retail sales as a closely watched economic policy meeting in Beijing is set to start.
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Later, policy decisions will be front and center in Europe, with the Bank of England and European Central Bank seen following the Fed with half-point hikes in rates.
Key events this week:
- China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday
- ECB rate decision and ECB President Lagarde briefing, Thursday
- Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday
- US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
- Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
- Futures on the S&P 500 rose 0.2% as of 9:30 a.m. Tokyo time. The S&P 500 fell 0.6%
- Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 0.8%
- Hang Seng futures rose 0.1%
- The Topix Index fell 0.1%
- The S&P ASX Index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0672
- The Japanese yen was little changed at 135.45 per dollar
- The offshore yuan fell 0.1% to 6.9509 per dollar
Cryptocurrencies
- Bitcoin was little changed at $17,843.9
- Ether fell 0.1% to $1,309.07
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.50%
- Japan’s 10-year yield was unchanged at 0.25%
- Australia’s 10-year yield advanced seven basis points to 3.43%
Commodities
- West Texas Intermediate crude was little changed
- Spot gold was little changed
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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