Asian stock markets were mostly weaker on Thursday as investors juggled the outlook for US monetary policy with a drop in commodity prices and an ongoing effort to tame financial risks in China.
The Federal Reserve decided on Wednesday to keep interest rates unchanged, as expected, but left open the prospect of raising them next month. The US central bank described the slowdown in growth during the March quarter – which sent a chill through markets at the end of last week – as “transitory” and said consumption growth had been solid and inflation was running close to its target.
The probability of the Fed lifting rates by 25 basis points at its June meeting jumped to 90 per cent, according to pricing data tracked by Bloomberg, from a 61.1 per cent chance a week ago.
China’s Shanghai Composite and the technology-focused Shenzhen Composite were each down 0.5 per cent. Mainland markets are drawing attention as money-market rates hover around two-year highs amid authorities’ efforts to tame financial risks by squeezing liquidity.
South Korea’s Kospi was up 0.6 per cent at a record intraday high and on track to surpass its previous peak set six years ago. The index’s advance has been underpinned by gains for Samsung Electronics, which was up 1.3 per cent at a record high today.
Australia’s S&P/ASX 200 was off 0.5 per cent, adding to a 1 per cent fall on Wednesday that was the biggest one-day drop since late March. Commodity stocks were weak, owing to big falls in the price of iron ore and base metals.
Fortescue Metals was down 4.3 per cent and one of the worst performers in the S&P/ASX 200. BHP Billiton was down 0.7 per cent, with the Australian government also stating it would block any attempt by the miner to incorporate the company in the UK, a proposal requested by activist hedge fund Elliott Associates.
Hong Kong’s Hang Seng was down 0.4 per cent as investors returned from a public holiday. Japanese markets were closed on Thursday.