Asian stocks lower on Fed­eral Re­serve rate hike ex­pec­ta­tion

Daily Local News (West Chester, PA) - - NEWS -

SEOUL, SOUTH KOREA >> Asian stock mar­kets were mostly lower on Wed­nes­day as com­ments from Fed­eral Re­serve officials strength­ened ex­pec­ta­tions of a rate hike by the Fed within this year.


Ja­pan’s Nikkei 225 rose 0.5 per­cent to 16,821.92 while South Korea’s Kospi was flat at 2,054.30. Aus­tralia’s S&P/ASX 200 was down 0.5 per­cent to 5,454.30. Hong Kong’s Hang Seng index gained 0.4 per­cent to 23,781.59. Stocks in South­east Asia and New Zealand were also lower. China’s Shang­hai Com­pos­ite Index was closed for a hol­i­day.


Com­ments by several Fed­eral Re­serve officials strength­ened investor ex­pec­ta­tions that the Fed would in­crease in­ter­est rates this year. Rich­mond Fed­eral Re­serve Pres­i­dent Jef­frey Lacker said rates need to be in­creased to keep in­fla­tion un­der con­trol, echo­ing the view held by Cleve­land Fed­eral Re­serve Pres­i­dent Loretta Mester, who said in an in­ter­view with Bloomberg that the econ­omy is ripe for an in­ter­est rate in­crease. The Fed is ex­pected by most in­vestors to wait un­til De­cem­ber to raise rates.

THE QUOTE: “We think Cleve­land Fed Pres­i­dent Mester’s re­it­er­a­tion of her hawk­ish­ness caused in­vestors to re-in­ter­pret the im­pli­ca­tions of the pre­vi­ous day’s man­u­fac­tur­ing ISM re­port as sig­nal­ing an in­creased like­li­hood of a De­cem­ber rate hike,” Tim Con­don, head of re­search in Asia at ING in Sin­ga­pore, said re­fer­ring to the In­sti­tute for Sup­ply Man­age­ment man­u­fac­tur­ing index. The index rose to 51.5 in Septem­ber from 49.4 in Au­gust, in­di­cat­ing that U.S. man­u­fac­tur­ing re­bounded last month.


The In­ter­na­tional Mone­tary Fund low­ered its fore­cast for the U.S. econ­omy this year to 1.6 per­cent from the 2.2 per­cent it had pre­dicted in July. It blamed the U.S. in­vest­ment drought on cut­backs in the en­ergy in­dus­try, a strong dol­lar that’s de­press­ing ex­ports and policy un­cer­tainty sur­round­ing the Novem­ber elec­tions. The fund left un­changed its fore­cast for over­all global growth this year at 3.1 per­cent. But the world’s ad­vanced economies are ex­pected to grow 1.6 per­cent this year, down from the 1.8 per­cent the fund fore­cast in July, pulled down by slower ex­pected growth in the United States. The IMF up­graded its fore­cast for Ja­panese growth to 0.5 per­cent this year and for the 19 coun­tries that use the euro cur­rency to 1.7 per­cent.


U.S. mar­kets closed lower on Tues­day. The Dow Jones in­dus­trial av­er­age fell 85.40 points, or 0.5 per­cent, to 18,168.45. The S&P 500 fell 10.71 points, or 0.5 per­cent, to 2,150.49. The Nas­daq com­pos­ite fell 11.22 points, or 0.2 per­cent, to 5,289.66.

OIL: U.S. bench­mark crude oil added 46 cents to $49.15 per bar­rel in New York. The con­tract fell 12 cents to close at $48.69 per bar­rel on Tues­day. Brent crude, the in­ter­na­tional stan­dard, ad­vanced 44 cents at $51.31 a bar­rel in Lon­don.


The euro strength­ened to $1.1222 from $1.1207 and the dol­lar slipped to 102.77 yen from 102.85 yen.


This file photo, shows the New York Stock Ex­change. Stocks are drift­ing be­tween gains and losses in early trad­ing Tues­day. Nine of the 11 sec­tors of the Stan­dard and Poor’s 500 index are lower. Util­i­ties and real es­tate stocks are down the most.

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