Source: AFP
Asian markets fell on Wednesday in line with a sell-off across much of the world as traders took their cash off the table following the end of a big hit in 2023, with eyes now on the release this week of Federal Reserve proceedings and US jobs data.
Stocks rallied in the last two months of last year on expectations that the U.S. central bank will cut interest rates several times this year as inflation eases, the labor market softens and the economy heads for a soft landing.
But analysts had warned that the rally was a little overdone and investors should brace for a pullback, with tech titans like Apple and Amazon likely to take a hit.
“The most common concern or belief we’ve heard from investors is that overbought conditions and euphoria will set in for a reversal to begin in 2024 in both bond yields” and stocks, said 22V’s Dennis DeBusschere. Research.
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“Overbought conditions and sentiment readings are hard to match.”
On Wall Street, the Nasdaq fell 1.6 percent and the S&P 500 was also in the red, although the Dow enjoyed a small gain.
And the bearish sentiment continued in Asia, where Hong Kong, Sydney, Seoul and Taipei were among the biggest losers, while Singapore, Wellington, Manila and Jakarta were also down.
Shanghai, however, moved on.
The first major releases of the year come this week, with minutes from the Fed’s December policy meeting due later on Wednesday, giving investors a fresh look at officials’ thinking on the interest rate outlook.
The post-meeting statement had indicated three cuts this year, although market participants are predicting many more spikes.
On Friday, non-farm payrolls data will be released, charting the economy’s path after the Fed raised borrowing costs to a 22-year high to tame inflation.
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The bank’s boss Jerome Powell said a smoothing of the labor market was critical to combating prices, although data in recent months showed inflation easing even as job demand remained strong, suggesting the economy was holding up well.
And International Monetary Fund chief Kristalina Georgieva said she was optimistic the Fed would be able to achieve a soft economic landing.
The bank’s actions “had the desired impact without pushing the economy into recession,” he told CNN International’s Christiane Amanpour. “Where the US economy is today, definitely a soft landing.”
Developments in China are being closely watched after reports that Beijing had ousted a top gaming industry executive involved in planned restrictions on the sector that caused a multibillion-dollar disaster for the country’s tech giants.
The draft restrictions published by the government regulator said they were aimed at limiting in-game purchases and preventing obsessive gaming behaviour.
Keys around 02:30 GMT
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Hong Kong – Hang Seng Index: DOWN 1.0 percent at 16,625.19 (close)
Shanghai – Composite: UP 0.06 percent to 2,964.19
Tokyo – Nikkei 225: Closed due to holiday
Dollar/yen: UP to 142.03 yen from 141.99 yen on Tuesday
EUR/USD: UP at $1.0952 from $1.0946
Pound/Dollar: UP to $1.2629 from $1.2621
Euro/pound: UP at 86.72 pence from 86.70 pence
West Texas Intermediate: DOWN 0.1% to $70.32 a barrel
North Sea Brent crude: DOWN 0.1% at $75.80 a barrel
New York – Dow: UP 0.1 percent at 37,715.04 (close)
London – FTSE 100: Down 0.2% to 7,721.52 (close)
Source: AFP