Stocks sink in Tokyo, Sydney, Seoul
BEIJING — Asian stock markets followed Wall Street lower on Thursday after investors saw minutes from a Federal Reserve meeting as a sign the U.S. central bank might hike interest rates faster to cool inflation.
The Nikkei 225 NIK, -2.88% in Tokyo tumbled 2.1%. The Shanghai Composite Index SHCOMP, -0.25% slipped 0.3% and the Hang Seng HSI, +0.72% in Hong Kong lost 0.3%.
The Kospi 180721, -1.13% in Seoul retreated 0.7% and Sydney’s S&P/ASX 200 XJO, -2.74% sank 2%. Benchmark indexes in Taiwan Y9999, -0.71% and Indonesia JAKIDX, -0.13% fell, but stocks gained in Singapore STI, +0.66% and Malaysia FBMKLCI, -0.94%.
On Wednesday, Wall Street’s benchmark S&P 500 index fell by its biggest daily margin in four months.
Notes released Thursday from the Fed meeting last month showed policymakers believe the U.S. job market is nearly healthy enough that ultra-low interest rates are no longer needed. Traders took that as a sign the Fed might be more aggressive about rolling back stimulus that is boosting stock prices.
The report “bludgeoned the markets” by upsetting expectations that earlier Fed plans were locked in, said Vishnu Varathan of Mizuho Bank in a report.
The Fed indicated in mid-December that plans to wind down stimulus would be accelerated after U.S. consumer inflation hit a 39-year high.
That jolted investors who had been encouraged by stronger corporate profits and the spread of coronavirus vaccinations. Despite that, the S&P 500 ended 2021 with a 26.9% annual gain.
On Wall Street, the S&P 500 SPX, -1.94% slid 1.9% on Wednesday to 4,700.58. The Dow Jones Industrial Average DJIA, -1.07% fell 1.1% to 36,407.11, pulling back from the previous day’s record. The Nasdaq composite COMP, -3.34% tumbled 3.3% to 15,100.17 in its biggest one-day decline in 11 months.
Bond yields, or the difference between the day’s market price and the payout at maturity, widened after the Fed notes came out.
The yield on the 10-year Treasury note, a benchmark for setting rates on mortgages and other loans, rose to 1.70% from 1.68%.
The Fed minutes showed policymakers expressed concern that inflation was spreading into more areas of the economy and would last longer than expected. They discussed the possible need to raise short-term interest rates at a quicker pace and allow bond purchases that inject money into the financial system to decline sooner.
In energy markets, benchmark U.S. crude CLG22, 0.49% lost 76 cents to $77.09 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 86 cents to $77.85 on Wednesday. Brent crude BRNH22, 0.37%, the price basis for international oils, sank 86 cents to $79.94 per barrel in London. It rose 80 cents the previous session to $80.80.
The dollar USDJPY, -0.21% declined to 115.93 yen from Wednesday’s 116.16 yen.