Asian Stocks Slip as Fed Rate Cut Hopes Fade
Asian stock markets weakened in early trading after Wall Street plunged, with the technology sector particularly under pressure once again. Indexes in Japan, South Korea, and Australia opened lower, although Asian indexes were actually on track for their third gain in four weeks. In the US, the S&P 500 closed down 1.7% and the Nasdaq 100 fell 2.1%. In Europe, the pound also suffered after media reports that British Finance Minister Rachel Reeves had abandoned an income tax hike.
The dollar, gold, and US Treasuries held onto earlier losses, while comments from Fed officials began to cast doubt on the likelihood of a December interest rate cut. The US October jobs report will be released without unemployment data because the household survey was not conducted during the government shutdown. Selling pressure on large technology stocks intensified as valuations were deemed expensive, and some funds began to shift to more defensive sectors. The probability of a December rate cut has now dropped below 50%.
Although President Donald Trump has signed legislation ending the longest government shutdown in history, it will take time for bureaucracy to return to normal. The partial vacuum of economic data due to the shutdown has some market participants worried that the Fed will instead choose to hold interest rates. Statements from several Fed officials have also tended to be cautious: policy must remain somewhat tight, inflation remains above target, and not all officials agree with the latest cut.
Beyond interest rates, Trump is also preparing substantial tariff cuts to curb rising food prices and push for a series of new trade deals. In Asia, attention is focused on Friday's release of Chinese data, including house prices, retail sales, and the unemployment rate. Earlier, Chinese central bank data showed that credit growth last month was the weakest in more than a year, indicating that loan demand and economic activity remain sluggish. All of this has made market participants in the Asian region tend to be cautious. (asd)
Source: Newsmaker.id
