Asian stocks retreat on lack of new Fed action

Business

A currency trader stands near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room in Seoul, South Korea, Wednesday, Sept. 16, 2020. Shares were mostly higher in Asia on Wednesday after advances for big technology companies carried Wall Street to further gains overnight. (AP Photo/Lee Jin-man)

Asian stock markets declined Thursday after the U.S. Federal Reserve indicated its benchmark interest rate will stay close to zero at least through 2023 but announced no additional stimulus plans.

Market benchmarks in Shanghai, Tokyo, Seoul and Hong Kong all retreated.

Wall Street’s benchmark S&P 500 index closed down 0.5% after the Fed said it won’t raise interest rates until inflation reaches 2%, which the U.S. central bank’s own projections show it doesn’t expect until late 2023.

Chairman Jerome Powell promised the Fed “we will not lose sight of the millions of Americans that remain out of work” but gave no indication of new stimulus.

Markets “hoped for the Fed to put policy money where the mouth is” but “ended up a tad disappointed,” Mizuho Bank said in a report. The Fed was “long on talk and short on action.”

The Shanghai Composite Index lost 0.6% to 3,265.35 and the Nikkei 225 in Tokyo sank 0.7% to 23,313.36. The Hang Seng in Hong Kong retreated 1.1% to 24,454.63.

The Kospi in Seoul shed 0.9% to 2,414.03 while Sydney’s S&P-ASX 200 declined 0.9% to 5,905.10. New Zealand and Jakarta retreated while Singapore advanced.

Global markets have recovered most of this year’s losses, boosted by central bank infusions of credit into struggling economies and hopes for a coronavirus vaccine.

Forecasters warn, however, that the recovery might be too big and fast to be supported by uncertain economic activity.

U.S. investors are counting on Congress for a new support package after additional unemployment benefits that help to support consumer spending expired, but legislators are deadlocked on its possible size.

The S&P 500 declined to 3,385.49. The Dow Jones Industrial average rose 0.1%, to 28,032.38. The Nasdaq composite lost 1.3% to 11,050.47.

Powell said the U.S. economy has recovered more quickly than

The Fed forecast the economy will shrink 3.7% this year, an improvement over its June outlook of a 6.5% drop. The Fed projected an unemployment rate at the end of the year of 7.6% instead of the 9.3% projected in June.

“A full economic recovery is unlikely until people are confident that it is safe to re-engage in a wide variety of activities,” Powell said.

In energy markets, benchmark U.S. crude oil for October delivery lost 28 cents to $39.88 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.88 on Wednesday to $40.16. Brent crude oil for November delivery shed 22 cents to $42 per barrel in London. It gained $1.69 the previous session to $42.22.

The dollar edged down to 105.04 yen from Wednesday’s 105.01 yen. The euro retreated to $1.1764 from $1.1801.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video Forecast

More Forecast

Don't Miss