Merakyat.org – Asian stock markets experienced a downturn, mirroring Wall Street’s recent slump, after the Federal Reserve indicated that it might not reduce interest rates in the upcoming year as previously anticipated.
The majority of regional markets saw a decline of over 1%, with U.S. futures and oil prices also witnessing a drop. On Wednesday, U.S. stocks took a hit after the Federal Reserve’s announcement. Despite Wall Street’s hopes, the Federal Reserve maintained its stance, suggesting that the interest rates might not see the expected cut next year.
The Federal Reserve kept its primary interest rate unchanged, marking its highest level in over two decades. The officials also hinted at a possible increase in the federal funds rate later this year, aiming to bring inflation down to a target of 2%. Jerome Powell, the Chair of the Federal Reserve, expressed that the rates are nearing their peak, if they haven’t reached it already.
Anderson Alves of ActivTrades commented on the situation, emphasizing that traders would be closely monitoring U.S. data, especially inflationary indicators, to assess the likelihood of sustained high rates.
In the Asian market, Hong Kong’s Hang Seng decreased by 1.3%, settling at 17,662.78, while the Shanghai Composite index dropped by 0.5% to 3,093.70. Tokyo’s Nikkei 225 saw a decline of 1.1%, ending at 32,647.72. Meanwhile, Seoul’s Kospi decreased by 1.4% to 2,524.80, and Australia’s S&P/ASX 200 went down by 1.2% to 7,075.40.
In contrast, shares of Toshiba Corp., the electronics and energy behemoth, rose by 0.2% after the announcement of a completed 2 trillion yen ($14 billion) tender offer by a Japanese consortium, paving the way for its delisting.
New Zealand’s stock market showed a slight uptick of 0.1%. Recent data from Statistics New Zealand revealed that the nation’s economy grew at a 3.2% annual rate during the April-June quarter. Finance Minister Grant Robertson expressed optimism about the economic growth, which is currently double the rate predicted by experts.
On Wall Street, the S&P 500 decreased by 0.9% to 4,402.20, the Dow Jones Industrial Average by 0.2% to 34,440.88, and the Nasdaq composite by 1.5% to 13,469.13. The Federal Reserve’s projections led to a rise in Treasury yields. The 10-year Treasury yield increased to 4.39%, and the two-year Treasury yield jumped to 5.18%.
High interest rates generally impact investment prices, with high-growth companies often being the most affected. Notably, tech giants like Microsoft, Apple, and Nvidia saw their stocks decline by at least 2%.
In other trading activities on Thursday, U.S. benchmark crude oil dropped by 76 cents, settling at $88.90 a barrel. Brent crude, the standard for international trading, decreased by 73 cents to $92.80.
The U.S. dollar experienced a slight decline against the Japanese yen, and the euro also weakened against the dollar.