While the minutes also underscored policymakers’ faith in the strength of the US economy, helping lift the mood in the stock market overnight, stock market sentiment remains fragile after weeks of volatile trading so far. that more global central banks continue on the tightening path.
“I don’t think the global economy is likely to slow down, I think we are slowing down. And for that reason, the potential for good investments right now is mostly on the short side,” said Barbara Ann Bernard, CIO of Wincrest. Capital, a global long/short equity strategy hedge fund, at the Reuters Global Markets Forum.
South Korea’s central bank on Thursday raised interest rates for a second straight meeting as it grapples with consumer price inflation that has hit 13-year highs.
All participants in the May 3-4 Fed meeting favored a half-percentage-point rate hike – the first of this magnitude in more than 20 years – and “most participants” believed that Further hikes of this magnitude would be “probably appropriate” at the Fed’s policy meetings in June and July, according to the minutes of the meeting.
Minutes reflect policymakers’ agreement on the strength of the U.S. economy, a tight labor market and high inflation, global supply issues, the war in Ukraine and continued coronavirus lockdowns in China biasing inflationary risks “upwards”.
Continued investor concern over these factors drove MSCI’s broadest index of stocks in the Asia-Pacific region, excluding Japan, down 0.54%, after rising earlier in the morning.
Chinese blue chips fell 1.11% despite a further drop in daily COVID-19 cases in the country, where containment measures aimed at curbing the spread of the virus threaten to undermine recent economic support measures.
China will strive to achieve reasonable economic growth in the second quarter and stem rising unemployment, Premier Li Keqiang said on Wednesday, quoted by the official Xinhua news agency.
Australian shares slid 0.47%, while Japan’s Nikkei stock index reversed earlier gains to fall 0.13%.
Soul’s Kospi was up 0.25% after the central bank’s rate announcement came in line with expectations.
The declines in Asia contrast with a more bullish mood on the Wall Exchange, where the Dow Jones Industrial Average rose 0.6%, the S&P 500 0.95% and the Nasdaq Composite 1.51%. [.N]
“I think the market is looking to stabilize here and looking forward to when the Fed can start to put different directions and say the economy has slowed down enough that they don’t see the need to keep raising rates,” said Rick Meckler, partner at Cherry Lane Investments New Vernon, New Jersey.
After rising on Wednesday following Fed minutes, the dollar was little changed in Asian exchanges. It was barely changed against the yen at 127.27, while the euro gained 0.11% to 1.0692%.
The Dollar Index, which tracks the greenback against a basket of major currencies, was just 0.03% lower at 102.02.
Movements in US Treasury yields were also muted. The 10-year yield rose slightly to 2.7577% after closing at 2.747%, and the two-year yield, sensitive to monetary policy, remained stable at 2.506%.
Crude oil was flat after a cautious rally this week, with Brent flat at $114.03 a barrel and US crude up 0.13% at $110.47.
Spot gold was down 0.2% at $1,849.19 an ounce. [GOL/]