Source: AFP
Asian markets fell on Monday as traders took a step back after last week’s rally, with Federal Reserve officials trying to temper expectations that the US central bank will cut interest rates several times next year.
Investors are also watching the Bank of Japan’s meeting this week, although recent speculation that it will move away from its ultra-loose monetary policy has faded, with observers predicting a move in the new year.
Stocks look set to end the year on a high after the Fed suggested it will begin easing monetary policy after a series of data showed inflation easing and the economy on track for a soft landing.
The Dow and Nasdaq hit record highs on Wall Street as technology companies rallied, but the rally slowed on Friday as investors took a step back, which analysts said was expected after the latest developments.
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Asia struggled earlier this week, with Hong Kong down more than one percent, while Tokyo, Shanghai, Sydney, Singapore, Mumbai, Bangkok, Taipei, Manila and Jakarta were also down. in the red.
However, Wellington and Singapore posted small gains.
Several Fed officials lined up last week to dampen expectations that they will cut interest rates next year. Some observers have predicted as many as six, but the bank’s “dot plot” prediction had three.
New York Fed chief John Williams told CNBC that “we’re not really talking about rate cuts,” adding that it’s “just premature to think” about a March cut, which some experts have suggested.
“If we get the progress that I hope to see … of course it would be somewhat natural … (to) move monetary policy over a period of years back to more normal levels.”
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Atlanta Fed chief Raphael Bostic said he forecast two cuts starting in the third quarter, while his Chicago counterpart, Austan Goolsbee, warned that policymakers were unlikely to act until they were convinced inflation would ease.
The Bank of Japan’s own decision is expected on Tuesday, and while there has been talk of a departure from years of ultra-loose policy, analysts don’t expect it to do so for several months.
Officials have kept interest rates in negative territory and are sticking to a policy of controlling bond prices in a bid to stimulate the economy, but with inflation rising and the yen struggling, they are now said to be changing.
“The BoJ does not need to rush to make policy changes,” said economists at Societe Generale.
“But markets will be watching for any sign that the board is willing to end negative interest rates or yield curve control.”
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Keys around 07:00 GMT
Tokyo – Nikkei 225: DOWN 0.6 percent at 32,758.98 (close)
Hong Kong – Hang Seng Index: DOWN 1.1 percent to 16,605.52
Shanghai Composite: DOWN 0.4 percent at 2,930.80 (close)
Dollar/yen: DOWN at 142.16 yen from 142.22 yen on Friday
EUR/USD: UP at $1.0918 from $1.0897
GBP/USD: UP at $1.2690 from $1.2677
Euro/pound: UP to 86.04 pence from 85.94 pence
West Texas Intermediate: UP 1.0 percent to $72.13 a barrel
Brent North Sea crude: UP 1.0 percent to $77.30 a barrel
New York – Dow: UP 0.2 percent at 37,305.16 (close)
London – FTSE 100: Down 1.0 percent to 7,576.36 (close)
Source: AFP