By Marketwatch and Associated Press
Asian markets mostly fell Friday, as investors took in the effects of comments by Fed Chairman Jerome Powell and the latest round of U.S.-China trade talks.
Powell on Wednesday disappointed traders by suggesting there would not be an interest-rate cut in the near future, and said lower inflation was “transitory.” That sparked a selloff on Wall Street, which continued into Thursday.
“Equity markets were looking for so much more from the Fed and were shocked when Chair Powell said the Fed did not see a convincing case to move rates in either direction, but tanked when he uttered the ominous ‘transitory’ word,” Stephen Innes, head of trading at SPI Asset Management, said in a note Thursday.
Also Wednesday, the latest round of U.S.-China trade talks ended in Beijing. Officials said progress had been made, but that obstacles still remain. Treasury Secretary Steve Mnuchin said earlier this week that he could know whether a deal will be made or not by next week. On Thursday, Politico reported that a U.S. Chamber of Commerce official had tempered expectations of a deal, saying China is unlikely to significantly reduce state subsidies in steel, aluminum and other sectors. The U.S. has argued those subsidies give Chinese companies an unfair advantage.
Global Times, a Chinese tabloid, reported that there were few details from recent negotiations in Beijing, but there was an overall consensus that both countries would ink a deal at some point.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.47% closed up 0.4%, but South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.57% fell 0.7%, and indexes in Singapore /zigman2/quotes/210597985/delayed SG:STI -0.03% and Indonesia /zigman2/quotes/210597981/delayed ID:JAKIDX -0.51% dropped as well, though stocks rose in Taiwan . Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.74% closed flat. China’s markets were closed for a holiday, and Japan’s Nikkei remained closed for a 10-day holiday commemorating the installation of a new emperor earlier this week.
Among individual stocks, oil producer CNOOC /zigman2/quotes/203421416/delayed HK:883 +2.42% and tech companies Tencent /zigman2/quotes/204605823/delayed HK:700 -1.59% and Sunny Optical /zigman2/quotes/206687505/delayed HK:2382 -1.05% fell. Samsung /zigman2/quotes/209800866/delayed KR:005930 -0.36% declined in South Korea, while Taiwan Semiconductor /zigman2/quotes/207385621/delayed TW:2330 0.00% gained in Taiwan. In Australia, Fortescue Metals /zigman2/quotes/202351558/delayed AU:FMG -0.67% rose while Beach Energy /zigman2/quotes/200513631/delayed AU:BPT +2.72% sank.
“Asia is unlikely to look past Wall Street’s performance overnight for initial direction,” Jeffrey Halley of OANDA said in a commentary. “And with post-Fed position unwinding in full swing, non-farm payrolls tonight and the upcoming weekend, traders in Asia could decide discretion is the better part of valor and lighten long equity positions as well,” he added.