Most Asian stock markets sank on Thursday after the Fed surprised investors by signaling that an interest rate hike is in the cards if economic conditions keep improving.
KEEPING SCORE: The benchmark Nikkei 225 index in Tokyo was flat at 16,646.66 while South Korea’s Kospi lost 0.5 percent to 1,946.78. Hong Kong’s Hang Seng shed 0.6 percent to 19,700.23 while the Shanghai Composite Index in mainland China was steady at 2,807.49. Australia’s S&P/ASX fell 0.6 percent to 5,323.30. Benchmarks in Taiwan, New Zealand and Southeast Asia also lost ground.
FED IN FOCUS: According to minutes of the Fed’s latest meeting, U.S. central bankers feel it would be time to raise rates at the next Fed meeting on June 14-15 if hiring and economic growth continue to strengthen and inflation keeps rising. The comments took investors by surprise and raise the prospect that some of the loose monetary policy that’s supported stock markets globally will be dialed back. Investors are hoping for more insight from Fed officials including Vice Chairman Stanley Fischer and William Dudley, president of the Fed’s New York regional bank, who are scheduled to give speeches later Thursday.
QUOTEWORTHY: “Markets have looked for government stimulus as a reason for investing rather than good company economics or fundamentals. Obviously therefore if there’s less chance of stimulus people are left wondering what to do,” said Andrew Sullivan, sales trader at Haitong Securities. “Yes it will be a shock to people, and I’m sure there will be a knee jerk reaction but the reality is we are nowhere near normal rates.”
WALL STREET: Major U.S. benchmarks were mostly little changed. The Standard and Poor’s 500 index eked out a 0.02 percent gain to close at higher 2,047.63. The Dow Jones industrial average slipped less than 0.1 percent to 17,526.62. The Nasdaq composite climbed 0.5 percent to 4,739.12.
ENERGY: Benchmark U.S. crude oil extended losses, falling 69 cents, or 1.2 percent, to $47.60 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 12 cents, or 0.2 percent, to settle at $48.19 a barrel on Thursday. Brent crude, used to price international oils, dropped 76 cents, or 1.6 percent, to $48.17 a barrel in London.
CURRENCIES: The dollar climbed to 110.22 yen from 110.10 yen in late trading Thursday. The euro fell to $1.1224 from $1.1225.