Asia report: Technology plays lead post-Fed tumble
Markets were weaker across the board in Asia on Thursday, as investors reacted to the outcome of the US Federal Reserve’s latest two-day policy meeting overnight.
In Japan, the Nikkei 225 was down 3.11% at 26,170.30, as the yen weakened 0.49% against the dollar to last trade at JPY 115.20.
Robotics specialist Fanuc managed gains of 1.11%, while among the benchmark’s other major components, Uniqlo owner Fast Retailing was down 2.63% and technology investing giant SoftBank Group lost 9%.
The broader Topix index was 2.61% weaker by the end of trading in Tokyo, closing at 1,842.44.
On the mainland, the Shanghai Composite was 1.78% lower at 3,394.25, and the smaller, technology-centric Shenzhen Composite was off 2.87% at 2,262.41.
South Korea’s Kospi tumbled 3.5% to 2,614.49, while the Hang Seng Index in Hong Kong lost 1.99% to 23,807.00.
Seoul’s blue-chip technology stocks were on the back foot, with SK Hynix down 3.4% and Samsung Electronics losing 2.73%.
Samsung’s fall came after the company reported a 53% improvement in fourth quarter operating profit year-on-year, but a 12% decline from the previous quarter.
It said it was expecting demand for servers and equipment to improve over 2022, but warned that supply issues were looking unlikely to ease any time soon.
Tech plays were also in the red in Hong Kong, with Alibaba down 7.19%, Baidu falling 4.04%, Bilibili sliding 9.93%, Meituan 6.93% weaker, and Tencent falling 2.24%.
The moves lower in Asia came after the Fed held interest rates at 0.25% in the US overnight, as chair Jerome Powell indicated that the Federal Open Market Committee (FOMC) could hike rates as soon as March.
“While there were no surprises around the statement and the decision to keep monetary policy on hold, the Powell press conference saw the heat quickly come out of the rally,” said CMC Markets chief market analyst Michael Hewson.
“Powell indicated that while a rate hike was likely to come in March, the FOMC wouldn’t hold back from continuing to do so at a faster pace than it did in the last tightening cycle, and that it would be appropriate to start shrinking the size of the balance sheet, as well at the same time.
“The press conference also sent the message that the Fed could well raise rates at every meeting, or even consider a 50 basis point hike if the need arose.”
Hewson said that while it did keep the Fed’s options open, it was not the message “increasingly nervous” markets wanted to hear.
“The sharp move higher in yields pulled US markets off their highs to finish lower on the day, although the Nasdaq 100 finished the day unchanged, having been up by as much as 3.5% at one point.”
Oil prices were mixed as the region went to bed, with Brent crude last up 0.06% at $90.01 per barrel, while West Texas Intermediate was down 0.03% at $87.32.
In Australia, the S&P/ASX 200 closed down 1.77% at 6,838.30, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 1.11% to 12,050.32.
The down under dollars were both weaker against the greenback, with the Aussie last off 0.54% at AUD 1.4131, and the Kiwi retreating 0.48% to NZD 1.5108.