India Markets closed

Asian markets fall, following Wall Street’s lead

Joanne Chiu

Tech stocks weigh on Hong Kong, Taiwan indexes

Getty Images/iStockphotoHong Kong stocks were down more than 1% Thursday.DMAMBMCMDMEMGPREVIEWZBZBRZDZDRZFZGZQZRZSZTZU

Asia-Pacific stocks fell in early trading Thursday, following the decline in the U.S. after the Federal Reserve reiterated plans to continue raising rates gradually amid firming inflation.

The central bank’s latest statement caused knee-jerk reactions in other assets classes Wednesday, but gold, the dollar and Treasurys quickly recouped losses. Stocks were the outlier, with the Dow Jones Industrial Average (^DJI) , S&P 500 (^GSPC)  and Nasdaq (^IXIC) losing near their session lows.

Weakness in U.S. stocks largely carried across the Pacific, with Singapore’s recently hot Straits Times Index (^STI)  falling 0.9% amid a retreat in bank stocks and Hong Kong’s Hang Seng Index (^HSI)  falling 1.5%.

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Market talk about fresh U.S. sanctions against Chinese telelcom-equipment makers ZTE and Huawei Technologies as well as renewed weakness in the Hong Kong dollar sparked concerns about fund outflows, said Hayman Chiu, research director at Cinda International. That has raised the potential of an interest-rate increase in Hong Kong, and shares of local property developers fell about 3% Thursday.

Meanwhile, Taiwan’s Taiex (^TWII)  dropped 0.8% in early action, with bellwethers Taiwan Semiconductor Manufacturing (2330.TW)  and Hon Hai (2317.TW)  each down more than 1%.

Australian equities continued to outperform after closing at a two-month high on Wednesday. The S&P/ASX 200 (^AXJO)  climbed a 0.7%, with gains of more than 1% in the commodities sector.

Japan markets are closed for a four-day holiday weekend.

Eugene Leow, a rates strategist at DBS, said the Fed could let inflation run above its 2% target and that topping that level shouldn’t be seen as something that would cause the central bank to accelerate interest-rate increases.

He forecasts one rate increase per quarter, versus the two-year stretch last decade, when the Fed raised rates by a quarter percentage point at every meeting.

Leow added that U.S. rates might pull some funds from Asia, and when that happens, there might be a need for more prudent monetary policies across the region.

Oil futures eased 0.2% in Asia after rallying Wednesday despite fresh 2018 highs for the dollar and bearish U.S. oil inventory data.

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