Asian markets dip as investors cash out after dovish Fed minutes
Shares in Asia lost ground Friday as dovish signals from the U.S. Federal Reserve weakened the dollar, with possible consequences for the competitiveness of Asian exports.
The Nikkei Stock Average NIK, -0.45% was down 0.2% with the S&P/ASX 200XJO, -0.79% off 0.7%. Hong Kong’s Hang Seng Index HSI, -0.46% was down 0.5%.
The minutes from the U.S. Federal Reserve’s latest meeting released earlier this week suggested the next interest-rate increase would come “fairly soon.” Some investors interpreted that as a dovish signal that the Fed was backing away from a rate rise in March.
The U.S. Dollar Index was flat in early Asian trade at 101.070 after slipping overnight. The dollar has perhaps lost some ground on mixed messages on tax reform from the U.S. administration, said Sean Callow, senior currency strategist at Westpac.
Yet the Australian dollar was down 0.1% against its American counterpart after touching three-month highs. Against the Japanese yen, the U.S. dollar fetched ¥112.83 in Asian morning trade.
Softer expectations for Fed rate increases have also hit U.S. Treasury yields, with that on the two-year note dropping to 1.192% from 1.224% Wednesday.
In other currency news, U.S. Treasury Secretary Steven Mnuchin backed away from labeling China a currency manipulator, saying Thursday that a decision would be reached on the matter before the U.S. Treasury makes its usual report in April.
However the Chinese currency, the yuan, barely moved on the comments.
South Korea’s benchmark stock index, the Kospi SEU, -0.64% , declined 0.5% despite consumer confidence rising for the first time in four months, and coming off an eight-year low in January.
Trump is set to address Congress on Tuesday, and may outline some of his policy intentions. Yet there is skepticism in Asia about how helpful these policies might be.
Markets are reacting to the risk of delay in fiscal stimulus spending and the unwinding of some of the optimism that followed President Trump’s encouraging comments on tax reforms, said CMC Markets chief market analyst Ric Spooner.
Source: MarketWatch
