Asian shares slip, Fed outlook fuels taper rumors
A man watches an electronic stock indicator in Tokyo, Wednesday, Oct. 30, 2013. Asian markets slipped Thursday after the US Federal Reserve kept its stimulus program unchanged but gave a rosier than expected summary of the economy, fueling expectations it will soon start winding the measure down. AP PHOTO/SHIZUO KAMBAYASHI
HONG KONG—Asian markets slipped Thursday after the US Federal Reserve kept its stimulus program unchanged but gave a rosier than expected summary of the economy, fueling 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 percent, or 174.41 points, to end at 14,327.94, Sydney eased 0.10 percent, or 5.4 points, to 5,425.5 and Seoul tumbled 1.43 percent, or 29.49 points, to 2,030.09.
Hong Kong lost 0.42 percent, or 97.65 points, to end at 23,206.37 and Shanghai fell 0.87 percent, or 18.85 points, to 2,141.61.
After a closely watched two-day policy meeting, the Fed said Wednesday it would hold steady on its bond-buying program 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 program.
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 percent and the S&P 500 declined 0.49 percent, while the Nasdaq lost 0.55 percent.
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 percent, or 130.55 points, to a new record close of 21,164.52 points.
State-run Bank of India rose 21.26 percent to 209.96 rupees while steel producer Tata Steel rose 2.45 percent to 334.4 rupees.
— Bangkok jumped 0.82 percent, or 11.76 points, to 1,442.88.
Coal producer Banpu rose 2.65 percent to 29 baht, while Airport Authorities of Thailand fell 0.47 percent to 212 baht.
— Jakarta closed down 1.40 percent, or 64.25 points, at 4,510.63.
State miner Aneka Tambang gained 2.56 percent to 1,600 rupiah, while Bank Negara Indonesia fell 0.52 percent to 4,800 rupiah.
— Singapore closed down 0.61 percent, or 19.77 points, at 3,210.67.
Singapore Telecom eased 1.31 percent to Sg$3.78 while real estate developer Capitaland was down 1.27 percent at Sg$3.12.
— Kuala Lumpur’s main index fell 10.53 points, or 0.58 percent, to close at 1,806.850.
UMW Holdings ended 2.7 percent lower at 12.80 ringgit while Genting lost 1.7 percent to close at 10.48. Fraser & Neave Holdings rose 0.7 percent to 18.62 ringgit.
— Taipei fell 0.18 percent, or 15.00 points, to 8,450.06.
Chunghwa Telecom rose 0.21 percent to Tw$94.6 while Hon Hai fell 0.67 percent to Tw$74.5.
— Wellington rose 0.86 percent, or 41.75 points, to 4,909.73.
— Manila closed down 0.18 percent, or 11.83 points, at 6,585.38.
Philippine Long Distance Telephone added 0.35 percent to 2,870 pesos and Ayala Corp. was up 0.25 percent at 603 pesos.—Danny McCord
