Asian markets down after mixed US Fed messages

ASIAN markets fell on Thursday, tracking losses on Wall Street, after the US Federal Reserve (Fed) cut rates for the first time in more than a decade but failed to offer a clear signal on future easing.

The move to ease the cost of borrowing was well telegraphed and meant to inoculate against global risks washing onto US shores, but financial markets were whipsawed by confusion over whether another cut would be coming.

Fed chair Jerome Powell told reporters he remains confident in the US economy and sees no sectors ready to go “bust”.

But he said the Fed decided on a 25-basis-poi nt c ut i n t he rate to “insure against downside risks from weak globa l grow th and trade policy uncertaint y”.

US President Donald Trump – who had been loudly calling for a rate cut – wasted no t ime in attack ing on Tw it ter, say i ng t he move fel l fa r short of the “aggressive rate-cutting cycle” he wanted.

“The Federal Reserve gave off the appearance of a rudderless ship with no specific game plan while doing little more than the bare minimum to appease the market’s expectations,” said VM Markets managing partner Stephen Innes.

The Fed decision sent the US dollar rallying to its highest level in more than two years, while a strong run for oil prices stalled with West Texas futures dropping more than 1.2 per cent.

“Commodities should still see some support on easy money flowing throughout all the major central banks in the world,” said Oanda Markets senior analyst Edward Moya.

Investors are awaiting key US economic data, including ISM’s nationwide manufacturing index, which was to be announced later in the day, and Friday’s employment data.

Hong Kong shares were down 0.8 per cent in afternoon trade after the city’s de facto central bank matched the Fed’s cut, lowering rates for the first time since 2008.

The move came a day after the release of quarterly gross domestic product figures showing a disappointing 0.6 per cent year-on-year growth in the financial hub.

Aut horit ies at t r ibuted “slugg ish” domest ic dema nd a nd a d rop i n ex por t s to fa l lout f rom t he yea rlong Sino-US t rade row, while a nalysts warn t hat weeks of civ il unrest cou ld t hreaten f ur t her economic headw inds.

Trade talks end

Shanghai a lso finished down 0.8 per cent a day after t he latest round of Sino-US trade ta lks wrapped up in t he cit y.

Negotiators on both sides said talks had been “efficient and constructive” but gave no signs of an imminent resolution to the impasse.

“W h i le t he ba r ha s been s et pr e t t y low f or pr og r e s s , t her e wa s a le v el of d i s appoi nt ment after t he meeting,” said Innes.

“The fact t hat t hey couldn’t agree on t he G20’s [Group of 20’s ] sof tpeddled concessions is a worr y ing sig n.”

Tokyo clawed back losses to finish 0.1 per cent, after Powell’s statement weighed on equities in key sectors during early trade.

Traders were likely to return to buying in companies with strong earnings after a slate of quarterly results were posted this week, Okasan Online Securities said in a note.

Elsewhere, Seoul rose 0.4 per cent and Taipei fell 0.9 per cent, while London was down 0.2 per cent in morning trade. The Cambodia Stock Exchange index, meanwhile, climbed 1.27 per cent.