(RTTNews) – Asian stock markets are trading sharply lower on Thursday, after mixed signals overnight from Wall Street, as traders reacted to hawkish statements from the US Federal Reserve, which indicated it plans to start raising interest rates “soon.” Citing high inflation and a strong labor market. The sharp rise in crude oil prices limited the downside. Asian markets closed mixed on Wednesday.
Traders also remain concerned about the massive spread of the coronavirus variant around the world and its impact on the pace of the economic recovery from the pandemic.
Fed Chairman Jerome Powell claimed during his post-meeting press conference that the central bank has “very much room” to raise interest rates before it hurts the economy. He said the Fed was likely to raise interest rates in March, and indicated that it would then start reducing its asset holdings.
The Fed left interest rates unchanged at levels close to zero as was widely expected but said “it would soon be appropriate to raise the target range for the fed funds rate”. In a separate statement, the Fed outlined plans to significantly reduce the size of its balance sheet, saying it expects the cuts to start after it starts raising interest rates.
The central bank said it will reduce the pace of its bond purchases to $30 billion per month starting in February, adding that it expects to end its asset purchase program by early March.
In an effort to combat the economic impact of the coronavirus pandemic, the Fed has left interest rates at zero to 0.25 percent since March 2020 until labor market conditions reached levels consistent with the Federal Open Market Committee’s assessments of maximum employment.
The Australian share market fell significantly after being in the green for most of the morning session on Thursday, extending losses in the previous three sessions, with the S&P/ASX 200 index dropping below the 6900 level, after mixed signals overnight from Wall Street. , where weakness in gold miners and technology stocks was partially offset by gains in energy and financial stocks.
Traders are reacting to hawkish comments from the US Federal Reserve, which indicated that it plans to start raising interest rates “soon,” citing high inflation and a strong labor market.
Traders also remain concerned about the sharp rise in domestic infections with the novel coronavirus, despite exceeding record levels. New South Wales recorded 17,316 new infections and 29 deaths on Wednesday. Victoria reported 13,755 new cases and 15 deaths, Queensland reported 11,600 new cases and 15 deaths, Tasmania reported 726 new cases, South Australia reported 1,953 new cases, and ACT reported 884 new cases.
The benchmark S&P/ASX 200 loses 107.60 points, or 1.55 percent, to 6,854.40, after hitting a low of 6,758.20 and a high of 7,042.80 earlier. The broader All Ordinaries index fell 116.80 points, or 1.61 percent, to 7,131.30. Australian markets ended Tuesday sharply lower.
Among the major mining companies, BHP Group and Rio Tinto earn nearly 3 percent each, while Fortescue Metals leads by nearly 1 percent. OZ Minerals fell 0.3 percent and Mineral Resources slipped more than 5 percent. Oil stocks are higher. Woodside Petroleum is gaining more than 4 percent, Origin Energy adding nearly 2 percent, Beach Energy rising nearly 10 percent and Santos leading nearly 4 percent.
Among the big four banks, Commonwealth Bank is up 0.2 per cent, National Australia Bank has added nearly 1 per cent, ANZ is up more than 2 per cent and Westpac is up more than 1 per cent.
In technology, Xero is losing nearly 5 percent, WiseTech Global is down more than 7 percent and Zip is down more than 5 percent. Appen is up 0.2 percent. Gold miners were weak as gold prices fell overnight. Newcrest Mining is down more than 2 percent, Resolute Mining is down more than 4 percent, Northern Star Resources is down nearly 5 percent, Evolution Mining is down more than 9 percent, and Gold Road Resources is down nearly 1 percent.
In other news, shares in Kogan fell 11.5 percent after the online retailer reported a 9 percent increase in gross sales, but gross profit fell 4.4 percent.
In economic news, Australia’s export prices rose 3.5 percent on-quarter in the fourth quarter of 2021, the Australian Bureau of Statistics said Thursday, slowing from 6.2 percent in the previous three months. On an annual basis, export prices rose 38.3 percent. Import prices rose 5.8 percent on a quarterly basis, up from 5.4 percent in the previous three months. It rose 13.8 percent year on year.
In the currency market, the Australian dollar is trading at $0.708 on Thursday.
The Japanese stock market fell sharply after paring early gains on Thursday, extending losses in the previous four sessions, with the Nikkei 225 index dropping nearly 700 points to stay above the 26,300 level, following the mixed overnight signals from Wall Street. The massive spread of the omicron coronavirus variant in the country is exacerbated.
Traders are also reacting to upbeat comments from the US Federal Reserve, which indicated that it plans to start raising interest rates “soon,” citing rising inflation and a strong labor market.
Traders also remain concerned about the sharp rise in new domestic coronavirus infections, with daily new COVID-19 cases in Japan rising to a new record high on Wednesday after crossing the 70,000 mark to push hospitals and clinics to breaking point. Daily new cases have also hit record levels every day since last week.
The benchmark Nikkei 225 index ended the morning session at 26,321.33, down 690.00 points, or 2.55 percent, after hitting a low of 26305.51 earlier. Japanese stocks closed slightly lower on Wednesday.
Market heavyweight SoftBank Group fell more than 6 percent, and operator Uniqlo Fast Retailing lost nearly 2 percent. Among the automakers, Toyota is losing more than 1 percent, while Honda is up 0.2 percent. In technology, Advantest stock is down more than 6 percent, Tokyo Electron has lost more than 4 percent, and screen holdings are down nearly 5 percent.
In the banking sector, Mizuho Financial fell 0.5 percent and Sumitomo Mitsui Financial fell 0.2 percent, while Mitsubishi UFJ Financial settled down.
Major exporters less. Sony is losing nearly 6 percent, Mitsubishi Electric is down more than 1 percent, and Panasonic is down nearly 3 percent. Canon flat.
In other news, shares of Japan’s Marubeni Corp surged more than 3 percent after Japan’s trading house said it would sell the grain business of its US unit Gavilon to commodity trading arm Viterra Glencore PLC for $1.125 billion. Marubeni will maintain the Gavilon fertilizer business and some facilities to export grain.
Among the other major losers, CyberAgent is down more than 14 percent, Neto Denko is down nearly 7 percent, Sumco is down more than 6 percent, Dua Holdings is down more than 5 percent, while M3 and Recruit Holdings are down nearly 5 percent. cent each. Toho Zinc and Fujitsu are down more than 4 percent each, while Bandai Namco, Nexon and Taiyo Yuden are down 4 percent each.
Conversely, Fanuc earns nearly 4 percent.
In the currency market, the US dollar is trading in the middle of the 114 yen range on Thursday.
Elsewhere in Asia, South Korea fell 2.9%, Hong Kong 2.1%, New Zealand 1.2% and China 1.1%, while Malaysia and Singapore fell 0.2 and 0.5%, respectively. Indonesia bucks the trend and is up 0.2%. Taiwan is closed at the start of the Lunar New Year holiday and is closed until February 4.
On Wall Street, stocks were mostly higher during most of the trading session on Wednesday but came under pressure in response to the upcoming monetary policy announcement from the Federal Reserve. All major averages moved to the downside, although the Nasdaq managed to slip back above the unchanged line.
After rising as much as 3.4 percent, the technology-focused Nasdaq slipped from its best levels but rose 2.82 points, or less than a tenth of a percent, to 13,542.12. Meanwhile, the Dow Jones fell 129.64 points, or 0.4 percent, to 34,168.09 points, and the Standard & Poor’s 500 fell 6.52 points, or 0.2 percent, to 4,349.93.
Meanwhile, major European markets moved sharply higher intraday. While the UK’s FTSE 100 jumped 1.3%, France’s CAC 40 and Germany’s DAX climbed 2.1% and 2.2%, respectively.
Crude oil futures settled higher on Wednesday as prices rose amid rising geopolitical tensions. US President Joe Biden has warned Moscow of harmful sanctions, including measures targeting President Vladimir Putin personally, if Russia invades Ukraine. West Texas Intermediate crude futures for March closed up $1.75, or 2 percent, at $87.35 a barrel, the highest settlement since October 2014.
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