Asian stocks drop after Fed Minutes show caution
Federal Reserve meeting minutes signaled that it’s in no rush to cut interest rates.
Stocks in Japan and Australia dropped while equity index futures for Hong Kong also drifted lower. Contracts for US stocks also slipped in early Asian trading after the S&P 500 climbed 0.2% on Wednesday to set a new high, with defensive sectors outperforming in a sign of investor caution. The yen extended its rally against the greenback on Thursday to trade around 151 per dollar.
Fed minutes showed policymakers in January expressed a readiness to hold interest rates steady amid stubborn inflation and economic-policy uncertainty. Officials also revealed pausing or slowing the balance-sheet runoff — a process known as quantitative tightening, or QT, until the government’s debt-ceiling drama is resolved.
“They will sit and wait before cutting again,” said Peter Boockvar, author of The Boock Report. “I say ‘cut’ because it still seems like they have an easing bias. The Fed also commented on the balance sheet. This could also be a reason why yields dipped a bit.”
Financial markets appeared unphased by comments from President Donald Trump late on Wednesday in the US, which touched on efforts to cut government spending and further work to be done on tariffs. He also touted the Nasdaq, Dow Jones and Bitcoin gains in the last few months.
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