Asian stocks extend new year rout amid profit-taking, rate-cut anxiety

investing.com:

Investing.com-- Most Asian stocks fell on Thursday, extending declines after a weak start to the year as persistent doubts over the timing and scale of the Federal Reserve’s interest rate cuts saw investors lock-in more profits.

Regional markets took a weak lead-in from Wall Street, with U.S. stock benchmarks falling for a second straight session on Wednesday as sentiment towards equities remained on edge. U.S. stocks also saw a heavy dose of profit-taking after a stellar melt-up through December.

In Asia, Japan’s Nikkei 225 index was the worst performer, losing 1.2% in catch-up trade after an extended new year’s holiday. Sentiment towards Japan was also rattled by a devastating earthquake earlier this week, which killed scores of people and caused widespread disruption in central Japan.

Purchasing managers index (PMI) data showed that Japanese manufacturing activity remained in contraction in December.

Losses in heavyweight technology stocks also weighed on the Nikkei, mirroring a trend seen across most stock markets.

Technology-heavy indexes continued to bear heavy losses as markets second-guessed just when the Fed could begin trimming interest rates this year. South Korea’s KOSPI fell 0.9%, while Hong Kong’s Hang Seng index shed 0.4%.

The minutes of the Fed’s December meeting showed central bank officials acknowledging progress against inflation over the past year. But the minutes also offered few cues on when the bank could potentially begin trimming interest rates as signaled during the meeting.

The minutes showed policymakers concerned over a soft landing for the U.S. economy, and whether monetary policy was too restrictive.

While the Fed is still expected to trim rates by at least 75 basis points in 2024, markets