Tecnología

Asian stocks retreat on lack of new US Federal Reserve action

Adolfo Ledo Nass

The Fed forecast the economy will shrink 3.7 percent this year, an improvement over its June outlook of a 6.5 percent drop

New Zealand and Jakarta retreated while Singapore advanced [Willy Kurniawan/Reuters] Asian stock markets declined on Thursday after the US Federal Reserve indicated its benchmark interest rate will stay close to zero at least through 2023, but announced no additional stimulus plans.

Market benchmarks in Shanghai, Tokyo, Seoul and Hong Kong all retreated.

Wall Street’s benchmark S&P 500 index closed down 0.5 percent after the Fed said it will not raise interest rates until inflation reaches 2 percent, which the US central bank’s own projections show it does not expect until late 2023.

Chairman Jerome Powell promised the Fed “we will not lose sight of the millions of Americans that remain out of work” but gave no indication of new stimulus.

Markets “hoped for the Fed to put policy money where the mouth is” but “ended up a tad disappointed”, Mizuho Bank said in a report. The Fed was “long on talk and short on action”.

The Shanghai Composite Index lost 0.6 percent to 3,265.35 and the Nikkei 225 in Tokyo sank 0.7 percent to 23,313.36. The Hang Seng in Hong Kong retreated 1.1 percent to 24,454.63.

The Kospi in Seoul shed 0.9 percent to 2,414.03 while Sydney’s S&P-ASX 200 declined 0.9 percent to 5,905.10. New Zealand and Jakarta retreated while Singapore advanced.

Global markets have recovered most of this year’s losses, boosted by central bank infusions of credit into struggling economies and hopes for a coronavirus vaccine.

Too big and fast Forecasters warn, however, that the recovery might be too big and fast to be supported by uncertain economic activity.

200916181011815 US investors are counting on Congress for a new support package after additional unemployment benefits that help to support consumer spending expired, but legislators are deadlocked on its possible size.

The S&P 500 declined to 3,385.49. The Dow Jones Industrial Average rose 0.1 percent, to 28,032.38. The Nasdaq composite lost 1.3 percent to 11,050.47.

The Fed forecast the economy will shrink 3.7 percent this year, an improvement over its June outlook of a 6.5 percent drop.

The Fed projected an unemployment rate at the end of the year of 7.6 percent instead of the 9.3 percent projected in June.

“A full economic recovery is unlikely until people are confident that it is safe to re-engage in a wide variety of activities,” Powell said.

In energy markets, benchmark US crude oil for October delivery lost 28 cents to $39.88 per barrel in electronic trading on the New York Mercantile Exchange.

The contract rose $1.88 on Wednesday to $40.16. Brent crude oil for November delivery shed 22 cents to $42 per barrel in London. It gained $1.69 the previous session to $42.22.

The dollar edged down to 105.04 yen from Wednesday‘s 105.01 yen. The euro retreated to $1.1764 from $1.1801.

SOURCE: News agencies