Shares in the Asia-Pacific region followed Wall Street lower on Thursday after the US Federal Reserve indicated it had no immediate plan to take unconventional measures to support market stability.
The Japanese Topix index fell 0.8 percent, while Australia’s S & P / ASX 200 benchmark lost 0.9 percent. South Korea’s Kospi fell 2.9 per cent. China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks fell 1 percent and Hong Kong’s Hang Seng slipped 1.9 percent.
In Taiwan, stocks for electronics parts plummeted, taking the Taiex index down as much as 5 percent after a Nikkei Asian Review report that Chinese telecom groups Huawei and ZTE had slowed down the development of 5G installations in China.
The S&P 500 ended Wednesday with 0.4 percent. The US stock benchmark has been booming in recent months, despite signs of persistent economic damage from the pandemic. On Tuesday, it recorded a record closing high, wiping out the full loss earlier in the year.
But Thursday’s fall in Asian equities came after the Federal Open Market Committee’s minute release last July, noting that uncertainty about the path of the economy had “greatly increased”, with fiscal support declining.
The minutes brought nothing to those hoping for more unconventional measures to keep loose financial conditions at bay – such as explicit guidance on the future path of the federal fund rate and control of yield curves, in which policymakers set targets for certain Treasury revenues.
“Many participants judged that revenue caps and targets were not guaranteed in the current environment, but should remain an option that the commission could re-evaluate in the future if circumstances changed significantly,” the minutes said.
Futures tipped U.S. stocks to lose further ground when Wall Street opened later in the day, with the S&P 500 expected to fall 0.6 percent. The FTSE 100 was expected to decline 1.3 percent.
“Officials are concerned about the possible cost of controlling yield curves,” said James Knightley, chief international economist at ING. “However, if revenues were to start rising more strongly. . . by revising down mortgage rates and borrowing costs for businesses, this option may be for more discussion. “
