Asian stocks were set to weaken today following a softer Wall Street close while the dollar slipped as markets digested new Federal Reserve comments that suggested rates will stay low for an extended period.
Australia’s S&P/ASX 200 lost 0.89 per cent in early trading, while Japan’s Nikkei 225 fell 0.22 per cent,
Hong Kong’s Hang Seng index futures lost 0.38 per cent.
Wall Street declines overnight were caused by month-end portfolio rebalancing “rather than a new trend in equities,” said Rodrigo Catril, senior FX strategist at NAB Market Research in Sydney.
The Dow Jones Industrial Average and the S&P 500 ended in the red, while the Nasdaq rose solidly. The S&P gained more than 7 per cent for the month to notch its best August since 1986 in what is traditionally a softer month for stock performance.
Investors in Asia await the release of China manufacturing data and an interest rate decision from the Australian central bank. While the Reserve Bank of Australia is not expected to change policy, its commentary on the economic outlook will be closely watched.
Most stocks slid overnight, but chalked up another month of gains for August. US tech shares rose again yesterday, powered by stock splits that lifted Apple Inc and Tesla Inc.
Providing some support to sentiment was AstraZeneca’s plan to enroll 30,000 participants in a late-stage study to evaluate its Covid-19 vaccine candidate, AZD1222. Vaccine news often lifts markets.
Taiwan stocks could see a boost after the US said yesterday it was establishing a new bilateral economic dialogue with the country, an initiative it said was designed to support Taipei.
Fed Vice Chair Richard Clarida yesterday expanded on Governor Jerome Powell’s comments from last week, saying that under the US central bank’s new policy view, a low rate of unemployment does not on its own trigger higher interest rates.
Last week, the Fed said its new strategy plan is to use higher inflation when the economy is robust to offset the impact of periods of weaker prices.
The Nasdaq fared even better than the S&P for the month, up nearly 10 per cent as it rallied for a fifth straight month.
Yesterday marked the first trading day for the revamped Dow, with Salesforce.com, Amgen Inc and Honeywell International Inc joining the 30-component index, replacing Exxon Mobil Corp, Pfizer Inc and Raytheon Technologies Corp Honeywell ended the session lower while a move higher late in the day pushed Salesforce and Amgen into positive territory.
In Asia, China’s Caixin manufacturing purchasing managers’ index
The Dow Jones Industrial Average fell 0.79 per cent, the S&P 500 lost 0.23 per cent, and the Nasdaq Composite added 0.68 per cent.
The dollar edged lower against a basket of major currencies early today. The dollar index fell 0.08 per cent, with the euro up 0.02 per cent to US$1.1938 (RM4.97).
The Japanese yen strengthened 0.04 per cent versus the greenback at 105.86 per dollar, while Sterling was last trading at US$1.3364, down 0.04 per cent on the day.
Expectations that the Fed will keep interest rates low for an extended period kept the dollar soft, marking a fourth straight month of declines, its longest losing streak since 2017. — REUTERS