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Business News/ Market / Stock-market-news/  Asian shares slip, Fed outlook fuels taper rumours
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Asian shares slip, Fed outlook fuels taper rumours

Tokyo sheds 1.20%, Sydney eases 0.10%, Seoul tumbles 1.43%, Hong Kong loses 0.42%, Shanghai falls 0.87%

Investors have been keeping a close eye on the Fed’s plans for the stimulus since May, when it indicated it might begin cutting down its bond purchases, sending global markets tumbling. Photo: ReutersPremium
Investors have been keeping a close eye on the Fed’s plans for the stimulus since May, when it indicated it might begin cutting down its bond purchases, sending global markets tumbling. Photo: Reuters

Hong Kong: Asian markets slipped on Thursday after the US Federal Reserve kept its stimulus programme unchanged but gave a rosier-than-expected summary of the economy, fuelling expectations it will soon start winding the measure down.

While the central bank’s decision to keep the $85 billion-a-month scheme in place was widely expected, the upbeat outlook provided strong support for the dollar.

Tokyo shed 1.20%, or 174.41 points, to end at 14,327.94, Sydney eased 0.10%, or 5.4 points, to 5,425.5 and Seoul tumbled 1.43%, or 29.49 points, to 2,030.09.

Hong Kong lost 0.42%, or 97.65 points, to end at 23,206.37 and Shanghai fell 0.87%, or 18.85 points, to 2,141.61.

After a closely watched two-day policy meeting, the Fed said on Wednesday it would hold steady on its bond-buying programme as it awaits further signs the US economy is strong enough to stand on its own feet.

Policymakers made no reference to the potential impact of October’s government shutdown and did not hint at future plans for the stimulus.

However, analysts noted the bank did not downgrade its outlook from earlier statements, and some suggested it could begin to reel in the scheme as early as December.

“While maintaining that the economy continued to expand at a moderate pace and that housing may have slowed slightly, overall the Fed noted that downside risks have diminished," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

The commentary was “slightly more optimistic than expected" and “not as dovish as many had expected", Esiner added.

Investors have been keeping a close eye on the Fed’s plans for the stimulus since May, when it indicated it might begin cutting down its bond purchases, sending global markets tumbling.

Tapering had been expected by the end of this year but a weak set of data—including soft jobs growth—and October’s two-week government shutdown had made that highly unlikely.

However, the latest comments have sparked talk of such a move before January.

The dollar advanced in New York on expectations there will be less cash washing around the financial system, although it retreated slightly in afternoon Asian trade.

The greenback bought 98.35 yen Thursday, compared with 98.52 yen in New York but well up from 98.14 yen earlier Wednesday in Tokyo.

The yen gained a measure of support from the Bank of Japan’s decision to delay expanding its own stimulus programme.

The euro bought $1.3702 and 134.79 yen Thursday, against $1.3738 and 135.35 yen.

On Wall Street the three main indexes retreated on the Fed news, with the Dow and S&P also hit by profit-taking after hitting record highs in the previous session.

The Dow fell 0.39% and the S&P 500 declined 0.49%, while the Nasdaq lost 0.55%.

In oil trade, New York’s main contract, West Texas Intermediate for December delivery, slipped seven cents to $96.70 in afternoon Asian trade. Brent North Sea crude for December dropped 43 cents to $109.43.

Gold cost $1,334.20 at 1030 GMT compared with $1,350.42 on Wednesday.

In other markets:

—Mumbai rose 0.62%, or 130.55 points, to a new record close of 21,164.52 points.

State-run Bank of India rose 21.26% to 209.96 while steel producer Tata Steel Ltd rose 2.45% to 334.4.

—Bangkok jumped 0.82%, or 11.76 points, to 1,442.88.

Coal producer Banpu rose 2.65% to 29.00 baht, while Airport Authorities of Thailand fell 0.47% to 212.00 baht.

—Jakarta closed down 1.40%, or 64.25 points, at 4,510.63.

State miner Aneka Tambang gained 2.56% to 1,600 rupiah, while Bank Negara Indonesia fell 0.52% to 4,800 rupiah.

—Singapore closed down 0.61%, or 19.77 points, at 3,210.67.

Singapore Telecom eased 1.31% to Sg$3.78 while real estate developer Capitaland was down 1.27% at Sg$3.12.

—Kuala Lumpur’s main index fell 10.53 points, or 0.58%, to close at 1,806.850.

UMW Holdings ended 2.7% lower at 12.80 ringgit while Genting lost 1.7% to close at 10.48. Fraser and Neave Holdings rose 0.7% to 18.62 ringgit.

—Taipei fell 0.18%, or 15.00 points, to 8,450.06.

Chunghwa Telecom rose 0.21% to Tw$94.6 while Hon Hai fell 0.67% to Tw$74.5.

—Wellington rose 0.86%, or 41.75 points, to 4,909.73.

—Manila closed down 0.18%, or 11.83 points, at 6,585.38.

Philippine Long Distance Telephone added 0.35% to 2,870 pesos and Ayala Corp. was up 0.25% at 603 pesos. AFP

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Published: 31 Oct 2013, 08:50 AM IST
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