AFP/ IANS/Hong Kong
Tokyo led a rout of Asian shares yesterday, mirroring big losses on Wall Street after the Fed defied unprecedented pressure from Donald Trump and raised interest rates, sparking fears the move could choke economic growth.
The Nikkei plunged 2.8% to 20,392.58 points, a 15-month low, as investors took fright over the pace of monetary tightening, with a slump triggered by the Dow’s fall to its lowest level of 2018 gathering pace.
The US Federal Reserve raised rates for the fourth time this year – as expected – but markets reacted badly after chairman Jerome Powell said the bank would not shift course on reducing its balance sheet.
Investors had hoped for a less aggressive approach amid concern that global growth is slowing, while Powell played down the impact of recent market turmoil on the US economy.
“They think the Fed has completely misjudged the situation and now it’s just a matter of... trying to find an exit while you can,” said Kyle Rodda, a market analyst at IG Group in Melbourne.
“We’re probably entering a stage now where markets have got it (in) their head that we’re preparing for quite sustained downside going into 2019.”
Japanese stocks also declined after the Bank of Japan left ultralow rates unchanged, with the threat of trade protectionism and slowing global growth casting a pall over the export-driven economy. A strong yen also put downward pressure on stocks, with the dollar falling below 112 yen.
Nissan dropped more than 2% after a Japanese court rejected prosecutors’ request to extend the detention of former Nissan chairman Carlos Ghosn after his arrest for financial misconduct. Shanghai fell more than 0.5% t0 2,536.27, even after the People’s Bank of China said it would supply lower-cost liquidity for up to three years to banks willing to lend more to small companies, as policy makers aim to shore up the flagging economy. Sydney closed more than 1% lower while Hong Kong and Seoul were both well down.
In line with weakness in global markets, India’s BSE Sensex and Nifty50 ended lower yesterday after the US Federal Reserve raised its short-term interest rate.
Despite a strong recovery in the last hour of the trade, Sensex closed 50 points lower, snapping its 7-session long gaining streak.
Metal and telecom stocks along with index pivotals finance and banking stocks ended lower.
Sensex settled 52.66 points or 0.14% lower at 36,431.67 after touching an intra-day high of 36,475.52 and a low of 36,202.90. The Nifty50 lost 15.60 points or 0.14% to finish at 10,951.70.
The Indian rupee gained close to 40 paise after the Fed decision and a sustained decline in the global crude oil prices. It traded around 70 against the US dollar after closing at 70.40 on
A pedestrian walks past a stock indicator board showing the share price of the Tokyo Stock Exchange. Tokyo’s benchmark Nikkei index plunged to a 15-month low yesterday.
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