Asia markets mostly lower, dollar hit by dovish Fed
HONG KONG–Asian markets mostly headed lower Thursday and the dollar retreated after the Federal Reserve said any rises in US interest rates would be slow.
The losses come despite another advance on Wall Street, while investors are keeping track of Greece’s troubled bailout talks as Europe’s leaders are warned of the dire consequences of failing to reach a deal.
Tokyo sank 1.13 percent, or 228.45 points, to close at 19,990.82, while Hong Kong shed 0.22 percent, or 59.13 points, to close at 26,694.66.
Shanghai tumbled 3.67 percent, or 182.54 points, to 4,785.35 on liquidity fears as several new firms prepare to list while profit-takers also moved in after a surge in the index over the past year that has seen it pile on about 140 percent.
Sydney fell 1.26 percent, or 70.5 points, to close at 5,524.9 but Seoul ended 0.34 percent higher, adding 7.02 points to 2,041.88.
After a two-day meeting the Fed on Wednesday held off hiking rates but altered its outlook for future rises, expecting a lower upward curve than previously forecast.
Afterwards, Fed boss Janet Yellen said its first interest rate hike in nine years would likely come “later this year.”
However, she added: “My colleagues and I would like to see more decisive evidence that a moderate pace of economic growth will be sustained, so the conditions in the labor market will continue to improve and inflation will move back to two percent.”
The prospect of lower borrowing costs boosted US shares. The Dow rose 0.17 percent, the S&P 500 gained 0.19 percent and the Nasdaq put on 0.18 percent.
“Yellen was dovish in the press conference,” David Buckle, London-based head of quantitative research at Fidelity Worldwide Investment, told Bloomberg News.
“She was at pains to point out that monetary policy will likely remain highly accommodative for a long time after the first rate rise.”
The Fed also cut its growth forecast for 2015 to 1.8-2.0 percent, from March’s 2.3-2.7 percent outlook, to account for the unexpected contraction in the first quarter of the year.
The news put pressure on the dollar, which was at 122.86 yen in Tokyo Thursday, against 123.43 yen in New York and well down from 123.67 yen in Asia earlier Wednesday.
Yellen also voiced concern about Greece’s debt crisis, warning the world economy could see significant turmoil if Athens did not reach an agreement with its creditors on overhauling its bailout.
“This is a very difficult situation. In the event that there is not agreement I do see the potential for disruptions that could affect the European economic outlook and global financial markets,” Yellen said.
Failure to hammer out a deal before a debt repayment deadline at the end of the month would see it default and possibly crash out of the eurozone.
Despite talks being at a stalemate the euro ticked higher against the dollar, buying $1.1372 compared with $1.1335 in New York and well up from $1.1264 earlier Wednesday in Tokyo.
However, it was at 139.71 yen against 139.91 yen in New York, although it is still higher than the 139.30 yen in Tokyo Wednesday.
The Greek central bank also warned that failure would start “a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and-–most likely-–from the European Union.”
The comments come as finance ministers from the 19 eurozone countries prepare to meet Thursday in Luxembourg, although several officials said they were not expecting a breakthrough.
On oil markets US benchmark West Texas Intermediate for July delivery added 23 cents to $60.15 while Brent crude for August was up 55 cents at $64.42.
Gold fetched $1,195.40 compared with $1,178.47 late Wednesday.
In other markets:
— Mumbai rose 1.06 percent, or 283.17 points, to end at 27,115.83.
Reliance Industries rose 5.41 percent to 981.45 rupees, mining major Coal India fell 0.92 percent to 394.10 rupees.
— Bangkok dropped 0.45 percent, or 6.75 points, to 1,508.04.
Coal producer Banpu was flat at 26 baht, while Airports of Thailand plunged 3.15 percent, or 10 baht, to 307 baht.
— Singapore closed down 0.77 percent, or 25.49 points, to 3,300.42.
United Overseas Bank gained 0.04 percent to Sg$23.00 while public transport firm ComfortDelGro eased 0.94 percent to Sg$3.18.
— Jakarta ended down 0.005 percent, or 0.254 point, at 4,945.50.
Heavy equipment provider United Tractors gained 1.75 percent to 20,350 rupiah, while lender Bank Negara Indonesia slipped 2.21 percent to 5,525 rupiah.
— Malaysia’s key index slipped 0.51 percent, or 8.74 points, to 1,718.12.
AirAsia surged 9.15 percent to 1.67 ringgit, and British American Tobacco rose 1.35 percent to 60.16 ringgit. Gaming resorts firm Genting lost 2.50 percent to close at 8.19 ringgit.
— Taipei rose 0.31 percent, or 28.54 points, to 9,218.37.
Hon Hai Precision Industry closed 0.21 percent higher at Tw$94.6 while Taiwan Semiconductor Manufacturing Co. was 0.35 percent lower at Tw$142.0.
— Wellington fell 0.51 percent, or 29.56 points, to 5,749.71.
Air New Zealand slumped 9.62 percent to NZ$2.395 after rival Jetstar announced a domestic expansion, while Chorus closed down 2.70 percent at NZ$2.88.
— Manila closed 0.94 percent, or 70.55 points, higher at 7,606.86.
Universal Robina added 2.86 percent to 197.50 pesos and Ayala Corp was up 2.50 percent at 799.50 pesos but Globe Telecom fell 0.61 percent to 2,600 pesos.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.