Asian markets slipped on Wednesday with investors nervous ahead of the release of the latest crucial economic data and the outcome of the Federal Reserve’s two-day policy meeting.
Stocks across the region sank in holiday-thinned trade, tracking a sharp sell-off on Wall Street after another blow was dealt to hopes the Federal Reserve will cut interest rates this year.
Gold sank, the dollar rebounded and benchmark US Treasury yields ticked higher after the US Labor Department reported hotter-than-expected first-quarter employment cost growth, which is unlikely to alter the Fed’s restrictive stance.
The Federal Reserve Open Market Committee (FOMC) is widely expected to leave interest rates unchanged at the end of its two-day meeting, as US inflation proves sticky.
Also on AF: 4 Months Jail for Binance Crypto Exchange CEO Changpeng Zhao
Japan’s Nikkei share average closed lower, with traders maintaining a cautious stance on the first day of the month, ahead of the Fed’s decision.
The Nikkei share average was down 0.34%, or 131.61 points, to close at 38,274.05, while the broader Topix fell 0.50%, or 13.77 points, to 2,729.40.
The large policy rate gap between Japan and the US continues to put pressure on the yen, raising questions on how excessive currency weakness will impact the economy and consumption.
The risk of currency intervention, and suspicion that Tokyo may already have intervened, was also keeping investors on alert.
Of the Nikkei’s 225 constituents, 151 stocks declined versus 72 advancers. Heavyweights Softbank Group lost 1.6% while Uniqlo parent firm Fast Retailing slipped nearly 1%.
The negative mood spilled over into the rest of Asia, though most markets – including Hong Kong, Shanghai, Seoul and Mumbai – were closed for a holiday. Sydney and Wellington were open and ended in the red.
Overnight, all three major US indexes recorded their first monthly percentage losses since October.
The first-quarter earnings season has passed its halfway point, with a host of high-profile results on tap this week, among them amazon.com and Apple Inc.
US Dollar Index Rallies
Analysts now see aggregate S&P 500 first-quarter earnings growth of 6.0% year-on-year, up from the 5.1% estimate as of April 1, LSEG data showed.
European stocks ended lower on Tuesday as a raft of bleak earnings dampened investor sentiment due to upbeat economic data and the increased likelihood that the European Central Bank could cut interest rates in June.
The pan-European STOXX 600 index lost 0.68% and MSCI’s gauge of stocks across the globe shed 1.23%.
The dollar, boosted by economic data, regained some strength against a basket of world currencies and the yen weakened against the greenback, paring gains in the aftermath of suspected currency intervention on the part of Japanese authorities.
The dollar index rose 0.62%, with the euro down 0.43% to $1.0673. The Japanese yen weakened 0.89% versus the greenback at 157.75 per dollar, while sterling was last trading at $1.2497, down 0.51% on the day.
US Treasury yields rose after the hotter-than-expected employment costs report as investors awaited the Fed decision. The yield on benchmark 10-year notes fell to 4.6902%, from 4.612% late on Monday.
Crude prices dropped on easing geopolitical tensions as Israel-Hamas peace talks moved forward and US data showed healthy crude output and exports.
Gold prices tumbled to a one-week low ahead of the Fed meeting but remained on course for their third consecutive monthly gain. Spot gold dropped 1.8% to $2,292.60 an ounce.
Key figures
Tokyo – Nikkei 225 < DOWN 0.34% at 38,274.05 (close)
Hong Kong – Hang Seng Index <> CLOSED
Shanghai – Composite <> CLOSED
London – FTSE 100 > UP 0.32% at 8,170.33 (0931 BST)
New York – Dow < DOWN 1.49% at 37,815.92 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
Read more:
China’s Factory, Services Activity Cools in April Amid Slowdown
China Plenum in July Aims to Modernise, Reform Economy
Shares of China Property Developers Rally on Stimulus Hopes
Nikkei Enjoys Post-Holiday Boost, Hang Seng Edges Higher
