Asian markets down over Fed signal, China tech crackdown

HONG KONG: Asian markets were broadly down on Thursday after the Fed signalled a possible inflation-induced policy change, while concerns lingered over China’s crackdown on tech giants.

The Federal Reserve said Wednesday that while rising prices were expected as the US economy recovered from the pandemic, the inflation jump was higher than expected.

Officials said the US central bank needs to be ready to pull back on its massive support programme if this persists, according to minutes from a June policy meeting.

But it gave no indication that a reversal was imminent — a stance consistent with commentary from Fed chair Jay Powell that did not jolt the market.

US markets appeared ready to set aside inflation fears — at least for the time being — with Wall Street finishing modestly higher as both the S&P 500 and Nasdaq edged to records.

“It took some time, but the Fed has finally acknowledged rising inflationary forces,” Louis Navellier, chairman of Navellier & Associates, said in a note to investors on Wednesday.

The strong overnight lead from Wall Street provided some boost in Asia, but Tokyo closed down Thursday as the Japanese government was set to impose a new virus state of emergency to fight a surge in infections.

Seoul was higher, as was Sydney where investors did not seem affected by news that the lockdown in Australia’s biggest city could be extended.

Wellington and Singapore were down.

Bourses in London, Paris and Frankfurt also fell on open as the European Central Bank was set to announce the results of an 18-month policy review — a review widely expected to see it redefine its inflation target.

Hong Kong stocks were down throughout the day, extending losses into a seventh day, on continued concerns about China’s crackdown on the country’s tech giants.

Beijing’s shocking decision to remove ride-hailing app Didi from online platforms on national security grounds sparked fears of a wider regulatory move against firms once seen as untouchable.

Authorities this week suggested they could revise rules for Chinese companies listed overseas — a move that would clip the wings of major firms such as Alibaba, Tencent and Bytedance and potentially limit their ability to attract foreign capital.

Thursday saw a key measure of mainland shares traded in the financial hub fall by up to three per cent, as investors moved to jettison shares of big-name Chinese firms.