Asian Stocks Slide as Yellen Lays Groundwork for Fed Rate Hikeby
Asian stocks fell for a second day, following U.S. equities lower, as investors braced for higher U.S. interest rates following Federal Reserve Chair Janet Yellen’s latest comments.
The MSCI Asia Pacific Index lost 0.3 percent to 133.48 as of 5:13 p.m. in Tokyo, with material and utility companies leading losses among the regional measure’s 10 industry groups. Yellen on Wednesday laid the groundwork for a December interest-rate increase by signaling higher confidence in the U.S. economic outlook.
“The U.S. economy has had the training-wheels support of ultra-easing monetary policy, and suddenly they’re being told by their parent -- the Fed -- it’s time to take them off,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about $110 billion. “Naturally, the markets, like the child, are feeling nervous.”
In a speech at the Economic Club of Washington, Yellen also warned that waiting too long to end the era of near-zero interest rates could force the central bank to tighten too quickly, which would risk disrupting financial markets and the six-year expansion.
The European Central Bank is expected to cut its deposit rate and further expand asset purchases at its meeting Thursday, kicking off a crucial 48-hour period for global markets. Yellen will speak before the U.S. Congress and November payrolls data is due Friday, probably the most-anticipated piece of American data before the Fed’s Dec. 16 interest-rate decision.
“There’s a lot of anticipation of ECB easing and it seems to be pretty much the consensus that it will happen,” said Oliver. “The question is if the ECB can surprise the consensus, and I suspect it’s going to be hard.”
Japan’s Topix index closed little changed for a second day, as oil and coal producers led gains while utilities declined. Japan Petroleum Exploration Co. jumped 2.2 percent as crude prices rebounded after falling below $40 a barrel on Wednesday. Daito Trust Construction Co. advanced 2.5 percent after saying orders for new building projects rose last month.
Chinese stocks rose for a fourth day as money-market rates dropped and speculation mounted the government will take steps to bolster growth in Asia’s largest economy. Bank of China Ltd., climbing 3.8 percent, led a gauge of financial stocks to a four-month high.
Australia’s S&P/ASX 200 Index fell 0.6 percent with BHP Billiton Ltd. losing 3 percent, the largest drag on the index. Hong Kong’s Hang Seng Index and New Zealand’s S&P/NZX 50 Index both lost 0.3 percent.
South Korea’s Kospi index dropped 0.8 percent. Government data showed the nation’s economy in the third quarter was better than initially estimated, growing at the fastest pace in more than five years.
Futures on the Standard & Poor’s 500 Index rose 0.4 percent after the underlying gauge dropped 1.1 percent on Wednesday as tumbling oil prices sparked a broader selloff in equities. Crude rebounded on Thursday after a report that Saudi Arabia is set to propose an eventual reduction in OPEC output.