Stocks in Asia traded cautiously on Friday afternoon as investors grappled with the consequences of a more dovish U.S. Federal Reserve.
The mainland Chinese markets were the biggest losers of the day, declining by the morning session’s end as the Shanghai composite fell 0.77 percent and the Shenzhen component dropping 1.242. The Shenzhen composite slid 1.092 percent. The CSI 300 index, which tracks the largest stocks traded on the mainland, fell 0.99 percent.
Hong Kong’s Hang Seng index shed earlier gains to fall 0.54 percent, with shares of Chinese tech giant Tencent declining 1.27 percent after the company reported its slowest annual profit growth in 13 years.
The broad MSCI Asia ex-Japan index shed much of its earlier gains, trading just above the flatline at 530.13, as of 12:31 p.m. HK/SIN.
Japan’s Nikkei 225 slipped 0.11 percent, as shares of index heavyweight Fast Retailing fell more than 1 percent. The Topix index was slightly lower.
The moves in Tokyo came after government data showed Japan’s annual core consumer inflation slowed in February, leaving its central bank in a bind.
The nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food costs, rose 0.7 percent in February from a year earlier, government data showed on Friday, falling short of a median market forecast for a 0.8 percent gain.
The slowdown from January’s 0.8 percent increase was due largely to a 1.3 percent drop in gasoline prices, which was the first year-on-year decline since November 2016, the data showed.
The Bank of Japan has battled low inflation rates for years, with its target rate of 2 percent remaining ever elusive despite attempts to accelerate price growth.
Over in South Korea, the Kospi was largely flat. Shares of tech heavyweight Samsung Electronics and chipmaker SK Hynix saw their stock rise more than 1 percent each, maintaining their Thursday momentum following an overnight jump in Micron shares stateside after the company signaled that a recovery in the memory chip sector is coming later in the year.
Meanwhile, shares in Australia gained as the ASX 200 advanced 0.43 percent, with most of the sectors in positive territory.
“It certainly feels like markets will need a few more days and sessions to interpret the recent change in Fed positioning and to absorb the further developments with regard to trade and geo-political factors, investors will be hoping for more smooth trading conditions in the weeks ahead but at the moment, it doesn’t look like they are going to get them,” analysts at Rakuten Securities Australia said in a note.
In overnight market action stateside, the major stock indexes advanced on the day, driven by gains in the technology sector and the latest policy statement from the Fed.
On Wednesday, the Fed said it does not expect to raise rates at all in 2019. The central bank had forecast at least two rate hikes for this year back in December. The Fed added that it expects to end its balance-sheet reduction process by the end of September.
“Markets have continued to digest the implications of a dovish Fed that looks set to leave the Fed Funds rate unchanged this year and potentially next. Tech shares have led the gains in equities, although financials have continued to struggle,” Rodrigo Catril, a senior foreign exchange strategist at National Australia Bank, said in a morning note.
Treasury yields fell sharply on Wednesday, with the benchmark 10-year rate hitting its lowest level in a year. The yield traded at 2.53 percent on Thursday while the short-term 2-year rate held at 2.41 percent. Yields move inversely to prices.
The U.S. central bank did, however, lower its economic growth forecast for 2019, raising concerns over a possible slowdown in the economy.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 96.320, slipping from earlier levels but still off lows below 96.0 seen yesterday.
The Japanese yen traded at 110.78 against the dollar after touching highs below 110.5 in the previous session, while the Australian dollar changed hands at $0.7107 after slipping from highs above $0.716 yesterday.
Oil prices slipped in the afternoon of Asian trading hours, with the international Brent crude futures contract slipping 0.18 percent to $67.74 per barrel and U.S. crude futures declining 0.2 percent to $59.86 per barrel.
— CNBC’s Fred Imbert contributed to this report.
