Asia Stocks Fall Most Since Trump Election Win After Fed Outlook

  • Energy, materials companies lead benchmark index declines
  • U.S. Federal Reserve now sees three rate increases in 2017

How the Fed Rate Hike Impacts Asian Markets

Asian stocks fell after the U.S. Federal Reserve raised borrowing costs, said inflation expectations have increased and forecast a faster pace for rate hikes next year.

The MSCI Asia Pacific Index dropped 1.6 percent, the most since Nov. 9, to 136.36 as of 4:54 p.m. Hong Kong time. All 11 primary groups declined as the index fell for the first time in three sessions.

  • The benchmark index in Asia fell 3.2 percent on Nov. 9, with short-term volatility spiking, as Trump stunned traders by defeating Clinton in the U.S. presidential race
    • AMP Capital said Australian, Asian shares are vulnerable to potential protectionist trade policies given their high trade exposure
  • Energy and materials companies fell the most on Thursday; Australia’s Santos led losses after saying it plans to sell shares to raise A$1.5 billion
  • Japan’s Topix rose after the yen weakened; the dollar was the chief beneficiary of the Fed’s first and only interest-rate hike of 2016
  • The dollar’s strength isn’t going to be welcomed by Chinese companies that use debt markets to fund acquisitions, said Chris Weston, chief market strategist at IG Ltd. in Melbourne
    • Stocks declined in Hong Kong and Shanghai 
  • South Korea’s central bank held rates, as expected; Indonesia decision scheduled for later today
  • MSCI EM Asia Index fell as much as 1.4%, the most since Nov. 14
    • “With policy support and stronger external buffers, we think EM Asia will muddle through risks, including the Fed’s hiking,” Bank of America Merrill Lynch analysts said in a note
  • Major Asian stock indexes: Topix rose 0.3 percent, S&P/ASX 200 fell 0.8 percent, Hang Seng Index dropped 1.8 percent, Shanghai Composite fell 0.7 percent, Shenzhen Composite rose 0.7 percent

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