Asian stocks fall after Fed discusses cut in US stimulus
Barring Sydney, key indices of Shanghai, Tokyo, Hong Kong and Seoul retreat
image for illustrative purpose
Asian stock markets fell Thursday after the Federal Reserve talked about possibly reducing US economic stimulus and Japanese officials prepared to declare a coronavirus state of emergency during the Olympics due to a surge in infections.
Market benchmarks in Shanghai, Tokyo, Hong Kong and Seoul retreated. Sydney gained. Also Thursday, South Korea reported a one-day record increase of 1,275 new coronavirus infections, adding to the region's anxiety about disease risks. Overnight, Wall Street closed at a new high, propelled by gains for technology, industrial and health care stocks. Minutes of the Federal Reserve's latest meeting in June gave an upbeat outlook for a US economy recovery and showed board members discussed how and when they might reduce monthly bond purchases that inject money int the financial system. "With the initial heavy lifting from economic reopening mostly factored in, the pace of reduction in unemployment rate ahead carries some uncertainty," said Yeap Jun Rong of IG in a report. "The Fed minutes reinforces that much awaits to be seen in the data ahead to guide policies pullback."
The Shanghai Composite Index lost 0.8 per cent to 3,526.07 after the Chinese Cabinet announced it will free up more money for lending by reducing the amount of deposits banks are required to hold in reserve. The Hang Seng in Hong Kong fell 2.8 per cent to 27,193.52, hurt by declines for Chinese tech stocks. They have been hit by increased enforcement of anti-monopoly and other rules including an order to ride-hailing service Didi to stop taking on new users while it overhauls how it handles customer data. Hong Kong-traded shares of e-commerce giant Alibaba Group lost 2.3 per cent and entertainment and social media operator Tencent Holding Ltd. slid 3 per cent. The Nikkei 225 in Tokyo lost 0.9 per cent to 28,118.03 after experts recommended a state of emergency in Tokyo from Monday through Aug 22. Possible measures include closing bars and restaurants that serve alcohol and a request to the public to stay home. City leaders also have the option of shutting department stores and other businesses. In South Korea, the Kospi lost 1 per cent to 3,252.68.
