Asian markets were mostly lower in early trading Friday, as investors took in the effects of comments by Fed Chairman Jerome Powell and the latest round of U.S.-China trade talks.
Powell on Wednesday disappointed traders by suggesting there would not be an interest-rate cut in the near future, and said lower inflation was “transitory.” That sparked a selloff on Wall Street, which continued into Thursday.
“Equity markets were looking for so much more from the Fed and were shocked when Chair Powell said the Fed did not see a convincing case to move rates in either direction, but tanked when he uttered the ominous ‘transitory’ word,” Stephen Innes, head of trading at SPI Asset Management, said in a note Thursday.
Also Wednesday, the latest round of U.S.-China trade talks ended in Beijing. Officials said progress had been made, but that obstacles still remain. Treasury Secretary Steve Mnuchin said earlier this week that he could know whether a deal will be made or not by next week. On Thursday, Politico reported that a U.S. Chamber of Commerce official had tempered expectations of a deal, saying China is unlikely to significantly reduce state subsidies in steel, aluminum and other sectors. The U.S. has argued those subsidies give Chinese companies an unfair advantage.
Global Times, a Chinese tabloid, reported that there were few details from recent negotiations in Beijing, but there was an overall consensus that both countries would ink a deal at some point.
Hong Kong’s Hang Seng Index HSI, +0.46% slipped 0.3%. South Korea’s Kospi SEU, -0.74% fell 0.6%, and indexes in Singapore STI, -0.06% and Indonesia JAKIDX, -1.25% dropped as well, though stocks rose in Taiwan Y9999, +0.83% . Australia’s S&P/ASX 200 XJO, -0.04% edged up 0.1%. China’s markets were closed for a holiday, and Japan’s Nikkei remained closed for a 10-day holiday commemorating the installation of a new emperor earlier this week.
Among individual stocks, oil producer CNOOC 0883, -1.58% and tech companies Tencent 0700, -0.92% and Sunny Optical 2382, +0.05% fell. Samsung 005930, -1.31% declined in South Korea, while Taiwan Semiconductor 2330, +2.32% gained in Taiwan. In Australia, Fortescue Metals FMG, +1.53% rose while Beach Energy BPT, -2.88% sank.
“Asia is unlikely to look past Wall Street’s performance overnight for initial direction,” Jeffrey Halley of OANDA said in a commentary. “And with post-Fed position unwinding in full swing, non-farm payrolls tonight and the upcoming weekend, traders in Asia could decide discretion is the better part of valor and lighten long equity positions as well,” he added.
On Thursday, losses by energy, technology and communications stocks handed Wall Street its second straight loss.
The broad S&P S&P 500 index SPX, -0.21% fell 0.2% to 2,917.52 and the Dow Jones Industrial Average DJIA, -0.46% dropped 0.5% to 26,307.79. The tech-heavy Nasdaq composite COMP, -0.16% was down 0.2% at 8,036.77.
Investors will be watching U.S. jobs data due Friday morning.
Benchmark U.S. crude CLM9, -0.66% shed 8 cents to $61.73 per barrel in electronic trading on the New York Mercantile Exchange. It sank $1.79 to settle at $61.81 per barrel on Thursday. Brent crude LCON9, -0.90% , the international standard, fell 23 cents to $70.52 per barrel. It gave up $1.43 to close at $70.75 per barrel in the previous session.
The dollar USDJPY, +0.00% eased to 111.49 Japanese yen from 111.51 yen late Thursday. The euro fell to $1.1173 from $1.1176.
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https://www.marketwatch.com/story/asian-markets-pull-back-on-feds-stance-lower-expectations-for-trade-deal-2019-05-02
2019-05-03 03:22:00Z
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