Asian Stocks Drop After Fed Minutes Show Caution
Stocks in Asia fell on Thursday following muted moves on Wall Street after minutes from the Federal Reserve’s meeting signaled it was in no hurry to cut interest rates.
Shares in Japan and Australia fell while equity futures for Hong Kong also fell. Futures for U.S. stocks also fell in early Asian trade after the S&P 500 rose 0.2% on Wednesday to hit a fresh high, with defensive sectors outperforming in a sign of investor caution. The yen extended its rally against the greenback on Thursday to trade around 151 per dollar.
The Fed minutes showed policymakers in January expressed readiness to keep interest rates steady amid stubborn inflation and economic policy uncertainty. Officials also indicated a temporary halt or slowdown in the runoff of its balance sheet — a process known as quantitative tightening, or QT, until the government debt ceiling drama was resolved. “They’re going to sit back and wait before they cut again,” said Peter Boockvar, author of The Boock Report. "I say 'cut' because it seems they still have an easing bias. The Fed also commented on the balance sheet.
That could also be why yields have come down a little bit." Financial markets appeared unfazed by comments from President Donald Trump on Wednesday night in the US, who touched on efforts to cut government spending and more work to be done on tariffs. He also praised the gains of the Nasdaq, the Dow Jones and Bitcoin in recent months. Bitcoin is a popular so-called Trump trade and surged to a record high in the months after the US election in November but has since fallen about 10% from its peak in January.
In Asia, a raft of data due on Thursday includes export orders for Taiwan, inflation for Hong Kong's one-year and five-year prime lending rates and China. Separate one-year medium-term lending facility data for China could be released any time until February 25.
The latest China data comes after the country posted its weakest start to inbound investment in four years, with new spending of more than $13 billion by foreign companies in the country in January.
Investors will also be focused on Alibaba Group Holding Ltd., which faces a key test in its earnings presentation on Thursday after a DeepSeek-fueled rally added more than $110 billion to its market value.
Elsewhere in the region, Rio Tinto Group posted a drop in annual profit, while Fortescue Ltd. reported a 53% drop in first-half profit, reflecting a drop in iron ore prices as Chinese demand weakened.
Source: Bloomberg
