Asian Markets Mostly Lower On Fed Minutes

Asian stock markets are trading mostly lower on Thursday, following the broadly negative cues overnight from Wall Street, as traders digested the U.S. Federal Reserve’s monetary policy announcement, which indicated the US Fed is preparing to begin reducing the size of its balance sheet soon after raising interest rates. Asian markets closed mostly lower on Wednesday.

The sell-off came as the Fed minutes seemed to have a more hawkish tone, raising concerns the central bank will be more aggressive than anticipated. According to the minutes of the December 14-15 meeting, members of the Fed are preparing to begin reducing the size of the central bank’s approximately $8.8 trillion balance sheet soon after raising interest rates.

The minutes noted that participants generally agreed it may be warranted to raise rates sooner or at a faster pace previously anticipated given the outlook for the economy, the labor market, and inflation.

The Australian stock market is sharply lower on Thursday, extending the losses in the previous session, with the benchmark S&P/ASX 200 just above the 7,400 level, following the broadly negative cues overnight from Wall Street, after the release of the FOMC minutes, which indicated the US Fed is preparing to begin reducing the size of its balance sheet soon after raising interest rates.

Traders also continue to be concerned about the sharp spike in domestic new coronavirus infections. New South Wales records 34,994 new cases and six deaths on Wednesday. Victoria reported a new daily record of 21,997 new cases and six deaths. Queensland recorded 10,332 new cases and one death and Tasmania reported 751 new cases.

The benchmark S&P/ASX 200 Index is losing 141.20 points or 1.87 percent to 7,424.60, after hitting a low of 7,422.60 earlier. The broader All Ordinaries Index is down 152/50 points or 1.93 percent to 7,747.10. Australian markets ended modestly lower on Wednesday.

Among major miners, BHP Group is gaining 1.5 percent and OZ Minerals is edging up 0.5 percent, while Rio Tinto and Fortescue Metals are gaining more than 1 percent each. Mineral Resources is losing 1.5 percent. is edging up 0.6 percent.

Oil stocks are lower. Woodside Petroleum, Origin Energy, Beach Energy and Santos are all losing more than 1 percent each.

Among the big four banks, Commonwealth Bank is losing more than 1 percent, ANZ Banking is edging down 0.3 percent, National Australia Bank is declining almost 1 percent and Westpac is down 0.6 percent.

In the tech space, Xero, Appen and Zip are losing 3.5 percent each, while Afterpay is plunging more than 10 percent and WiseTech Global is slipping more than 5 percent.

Gold miners are lower. Newcrest Mining, Northern Star Resources and Evolution Mining are losing more than 2 percent each, while Resolute Mining is declining more than 1 percent and Gold Road Resources is slipping 2.5 percent.

In economic news, the services sector in Australia continued to expand in December, albeit at a slower pace, the latest survey from Markit Economics showed on Thursday with a services PMI score of 55.1. That’s down from 55.7 in November, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the composite index fell to 54.9 in December from 55.7 in November.

In the currency market, the Aussie dollar is trading at $0.720 on Thursday.

The Japanese stock market is sharply lower on Thursday, giving up the gains in the previous two sessions, with the benchmark Nikkei 225 staying above the 28,800 level, following the broadly negative cues overnight from Wall Street, as traders digested the U.S. Federal Reserve’s monetary policy announcement, which indicated the US Fed is preparing to begin reducing the size of its balance sheet soon after raising interest rates.

The benchmark Nikkei 225 Index closed the morning session at 28,721.49, down 610.67 points or 2.08 percent, after hitting a low of 28,713.88 earlier. Japanese shares ended slightly higher on Wednesday.

Market heavyweight SoftBank Group is losing 1.4 percent, while Uniqlo operator Fast Retailing is declining almost 3 percent. Among automakers, Toyota is adding more than 1 percent and Honda is edging up 0.3 percent.

In the tech space, Advantest is losing more than 2 percent, Screen Holdings is declining 3.5 percent and Tokyo Electron is down almost 2 percent.

In the banking sector, Mitsubishi UFJ Financial is edging down 0.2 percent, while Sumitomo Mitsui Financial and Mizuho Financial are flat.

The major exporters are lower. Sony is declining 6.5 percent, Mitsubishi Electric is losing almost 1 percent and Canon is edging down 0.4 percent. Panasonic is flat.

Among the other major losers, Terumo is losing more than 7 percent and M3 is slipping more than 6 percent, while Taiyo Yuden and Fuji Electric are declining more than 4 percent each. Keisei Electric Railway is down almost 4 percent.

Conversely, Shionogi & Co. is gaining almost 3 percent and Shinsei Bank is adding more than 2 percent.

In economic news, the services sector in Japan continued to expand in December, albeit at a slower pace, the latest survey from Jibun Bank revealed on Thursday with a services PMI score of 52.1. That’s down from 53.0 in November, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the composite index fell to 52.5 in December from 53.3 in November.

In the currency market, the U.S. dollar is trading in the higher 115 yen-range on Thursday.

Elsewhere in Asia, Taiwan and New Zealand are down 1.1 percent, while China, South Korea, Indonesia, Malaysia are all lower by between 0.1 and 0.6 percent each.. Singapore is higher.

On Wall Street, stocks moved notably lower during trading on Wednesday with traders reacting negatively to the minutes of the latest Federal Reserve meeting. The tech-heavy Nasdaq showed a particularly steep drop, extending the sharp pullback seen in the previous session.

After reaching a new record intraday high, the Dow turned lower following the release of the Fed minutes, slumping 392.54 points or 1.1 percent to 36,407.11. The Nasdaq plunged 522.54 points or 3.3 percent to 15,100.17 and the S&P 500 tumbled 92.96 points or 1.9 percent to 4,700.58.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.’s FTSE 100 Index edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index climbed by 0.7 percent and 0.8 percent, respectively.

Crude oil prices showed a notable advance Wednesday on optimism the Omicron variant of the coronavirus will not significantly impact global demand. West Texas Intermediate crude oil futures for February delivery jumped $0.86 or 1.1 percent to $77.85 a barrel.

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