Markets in Asia fell on Friday, following a sell-off on Wall Street sparked by a series of better-than-expected U.S. data that fueled concerns that the Federal Reserve will hold off on cutting interest rates this year.
A weeks-long rally in stocks has sputtered in recent days on profit-taking and as central bank officials fended off bets on an early tapering.
Confidence took another hit on Thursday as a gauge of the services sector showed services activity expanded at its fastest pace in a year, while the factory sector also beat forecasts.
Meanwhile, fewer people than expected filed for unemployment, suggesting the labor market remains tight.
The readings showed the world’s top economy is still in rough shape, dampening the enthusiasm sparked by last week’s news that the consumer price index slowed in April after three months of topping forecasts.
Asian shares mixed after Fed minutes, Nvidia provides support
“The data erases some of the cooling signals in recent results and runs counter to the longer run of broader US data which tends to surprise on the soft side,” said Taylor Nugent of National Australia Bank.
The data came minutes after the Fed’s policy decision in May showed policymakers wanted to keep borrowing costs high until they were sure rates were under control, with some even saying they were willing to raise again .
FHN Financial’s Chris Low said: “The minutes are a reminder that while the Fed doesn’t see another rate hike as likely — and certainly doesn’t see it as a base case — it won’t rule out hikes if inflation misbehaves.” “
All three major indices in New York ended in the red and Asia followed suit.
Hong Kong fell for a fourth straight day, having hit a nine-month high earlier in the week, while losses were also recorded in Tokyo, Shanghai, Seoul, Singapore, Sydney, Wellington, Taipei and Manila.
UK inflation slows to near three-year low
The prospect of interest rates remaining at two-decade highs for most of the year put upward pressure on the dollar.
Investors are paying particular attention to the yen after Japanese officials recently waded into currency markets when it hit a 34-year low against the dollar.
The Japanese unit was also weighed down by data showing inflation eased last month, leading to speculation about when the country’s central bank will raise interest rates again, having risen in March for the first time in 17 years.
The price slowdown will not “prevent financial markets from speculating on further tightening by the Bank of Japan,” said Kristina Clifton, at the Commonwealth Bank of Australia.
But he added that “at this stage, we expect the BoJ to wait until around October before raising rates again.”
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 1.2 percent at 38,649.15 (break)
Hong Kong – Hang Seng Index: Down 1.1 percent to 18,662.59
Asian markets hit Wall St record ahead of Nvidia results, Fed minutes
Shanghai Composite: DOWN 0.1 percent at 3,114.54
Dollar/yen: UP to 157.14 yen from 156.93 yen on Wednesday
EUR/USD: DOWN to $1.0809 from $1.0815
GBP/USD: DOWN to $1.2693 from $1.2696
Euro/pound: UP at 85.18 from 85.16 pence
West Texas Intermediate: UP 0.1 percent to $76.92 a barrel
North Sea Brent crude: UP 0.1 percent to $81.40 a barrel
New York – Dow: DOWN 1.5 percent at 39,065.26 (close)
London – FTSE 100: Down 0.4% to 8,339.23 (close)
Source: AFP