Asian Stocks Down, Hawkish Fed Policy Decision “Largely as Expected”

  • Stock Market News
Asian Stocks Down, Hawkish Fed Policy Decision “Largely as Expected”
Credit: © Reuters.

By Gina Lee – Asia Pacific stocks were down on Thursday morning, with U.S. Treasuries trimming a fall. Investors continued to digest U.S. Federal Reserve Chairman Jerome Powell’s signal of an interest rate hike as soon as March 2022, with more to follow.

Japan’s Nikkei 225 fell 2.47% by 9:20 PM ET (2:20 AM GMT). South Korea’s KOSPI slid 2.94%, with Samsung Electronics (OTC: SSNLF ) Co. Ltd. (KS: 005930 ) missing profit estimates.

In Australia, the ASX 200 fell 2.75%, re-opening after a holiday. Across the Tasman Sea, New Zealand’s consumer price index grew 1.4% quarter-on-quarter and 5.9% year-on-year in the fourth quarter of 2021.

Hong Kong’s Hang Seng Index fell 2.11%.

China’s Shanghai Composite was down 0.69% and the Shenzhen Component was down 0.29%.

U.S. shares gave up gains from a rally on Wednesday but were edging upwards. The benchmark U.S. 10-year Treasury yield was around 1.85%, and the gap between five- and 30-year yields was almost the narrowest since early 2019.

Powell’s comments accompanied the Fed’s latest policy decision, handed down on Wednesday. Although he did not provide a specific timetable, Powell emphasized the central bank’s determination to curb high inflation, with the Fed likely to commence asset tapering after hiking borrowing costs.

The imminent possibility of a tighter Fed monetary policy has driven a selloff in stocks and bonds in 2022 to date. Investors will now have to adjust to central banks withdrawing COVID-19-era stimulus but are also weighing the risks to economic recovery.

The Fed meeting “played out more hawkishly than we expected,” Standard Chartered (OTC: SCBFF ) Bank global head of G-10 FX research Steven Englander said in a note.

“The statement was largely as anticipated, but Powell emphasized upside risks to inflation, pointing to a steady pace of policy withdrawal.”

The South African Reserve Bank will also hand down its policy decision later in the day. Investors also await U.S. data, including GDP and core durable goods orders, due on the same day.

In other corporate news, Tesla Inc.'s (NASDAQ: TSLA ) profits beat estimates, but shares went on a rollercoaster ride in extended trading after the company said supply-chain troubles will limit output. Intel Corp .'s (NASDAQ: INTC ) shares fell on a disappointing profit forecast, while Pershing Square (NYSE: SQ ) Capital Management is now among Netflix Inc.'s (NASDAQ: NFLX ) top 20 shareholders, Bill Ackman tweeted on Wednesday.

Meanwhile, the U.S. delivered a written response to Russia regarding tensions over Ukraine. U.S. Secretary of State Antony Blinken said the response lays out “a serious diplomatic path forward” even as it rejects some of Russia’s key demands.

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