Stocks in Asia Pacific were mixed in Thursday morning trade, following the U.S. Federal Reserve’s overnight monetary policy decision and hints that the central bank is not considering a cut in interest rates at this moment.
South Korea’s Kospi recovered from its earlier slip to gain 0.18% in morning trade, as shares of industry heavyweight Samsung Electronics rose 0.11% and chipmaker SK Hynix soared 2.53%.
The ASX 200 in Australia, on the other hand, declined 0.62% as the sectors traded mixed.
Markets in China and Japan are closed for holidays.
Asia-Pacific Market Indexes Chart
Overnight on Wall Street, the Dow Jones Industrial Average dropped 162.77 points to close at 26,430.14, while the S&P 500 declined 0.8% to end at 2,923.73 after hitting an all-time high. The Nasdaq Composite slipped 0.6% to close at 8,049.64. The S&P 500 also posted its worst day since March 22.
Federal Reserve officials voted to hold interest rates steady Wednesday, while Fed Chairman Jerome Powell said in a news conference that recent low inflationary pressures may only be “transitory. ” That dashed speculation the central bank was entertaining the idea of a rate cut because of tame inflation.
Data released earlier this week showed the core personal consumption expenditure price index remained unchanged in March and was up 1.6% year over year — below the Fed’s 2% target. U.S. President Donald Trump had urged the Fed to cut rates by 1 percentage point this week because of low inflation.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.632 after a spike from the 97.2 handle in the previous session.
“The dollar should continue to strengthen for 2 main reasons — first the Fed chair made it very clear that when it comes to the economy he sees the glass half full. He expects the outlook to improve as the prior weakness eases. Secondly, he sees no reason to be talking about rate cuts,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in an overnight note.
“This view contrasts sharply with other central banks that have recently expressed concerns about growth and talked openly about the possibility of a response to counter that trend,” Lien said.
On the U.S.-China trade front, sources told CNBC on Wednesday that a trade deal between the two economic powerhouses could be announced by next Friday.
The Japanese yen, widely seen as a safe-haven currency, traded at 111.49 against the dollar after seeing highs below 111.2 yesterday. The Australian dollar was at $0.7015 after declining from levels above $0.704 yesterday.
Oil prices declined fractionally in the morning of Asian trading hours, with the international benchmark Brent crude futures contract at $72.12 per barrel and U.S. crude futures at $63.57 per barrel.
— CNBC’s Fred Imbert contributed to this report.
