Stocks in Japan down 2%; tech stocks fall in Hong Kong
Asian stock markets sank Thursday after the Federal Reserve raised U.S. interest rates and Wall Street dived to a 15-month low.
Tokyo’s Nikkei 225 index NIK, -2.84% fell 2.5% as the Bank of Japan left short- and long-term rate targets unchanged, as expected. SoftBank Holdings9984, -4.72% fell more than 3% a day after its mobile unit made a lackluster public debut.
The Shanghai Composite Index SHCOMP, -0.52% lost 0.8% while the smaller-cap Shenzhen Composite 399106, +0.20% fell just 0.2%. Beijing unexpectedly announced a 100 billion yuan ($15 billion) lending program to support entrepreneurs. Financial analysts saw the “targeted easing” as a sign policymakers want to shore up economic growth without reigniting a rise in national debt levels.
Korea’s Kospi SEU, -0.90% lost 0.9% as Samsung 005930, -1.15% slid 1%. Australia’s S&P-ASX 200 XJO, -1.34% shed 0.6% and Taiwan’s TaiexY9999, -1.11% also declined. New Zealand’s benchmark NZ50GR, +0.11% rose slightly while stocks in Singapore STI, -0.26% and Malaysia FBMKLCI, -0.31% were muted.
Earlier, the Fed raised its key interest rate for a fourth time this year to reflect U.S. economic strength and said it plans more increases next year. The increase lifted the Fed’s benchmark rate to its highest level since the 2008 global financial crisis. The Fed said it expects two rate increases next year instead of three. Investors were disappointed Chairman Jerome Powell failed to go further in indicating a slowdown in the pace of increases.
Stocks gave up a rally and plunged, sending the market to its lowest level since September 2017. The Dow Jones Industrial Average DJIA, -0.63% swung from a gain to close down 1.5% at 23,323.66. The S&P 500 SPX, -0.31% skidded 1.5% to 2,506.96. It has lost 9.2% this month. The Nasdaq composite gave up 2.2% to 6,636.83.
“It feels like we are back to square one again on Asia risk as we try to playbook early 2019 risk sentiment now wedged between a data dependent Fed and a very uncertain outlook from the PBOC on the stimulus front as the 90-day moratorium on tariffs looms ominously,” said Stephen Innes, head of Asia-Pacific trading at Oanda, in a note to clients early Thursday. “And with so much uncertainly dotting the global growth recovery, markets will likely greet the new year on very shaky footings.”
Benchmark U.S. crude CLF9, +3.72% lost 77 cents to $47.40 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.57 on Wednesday to close at $48.17. Brent crude LCOG9, -2.39% , used to price international oils, retreated 65 cents to $56.59 per barrel in London. It gained 98 cents the previous session to close at $57.24.
The dollar USDJPY, -0.78% eased to 112.41 yen from Wednesday’s 112.44 yen.