Asian stocks waver as traders ponder rate cut bets
By Ankur Banerjee
SINGAPORE (Reuters) — Asian shares fell on Thursday and the dollar was near a three-week high as traders dialled back bets of steep and early rate cuts this year, with the minutes of the Federal Reserve's last meeting failing to provide clues to when U.S. cuts might start.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.26% and was headed for third straight day of losses in a sobering start to the year. Japan's Nikkei fell 1% on its first trading day of the year.
China stocks remained under pressure, with uncertainties about a recovery in the world's second-biggest economy keeping investors on the fence. The blue-chip CSI 300 Index fell 0.37%, while Hong Kong's Hang Seng Index eased 0.1%.
A private-sector survey showed on Thursday that China's services activity expanded in December at the fastest pace in five months thanks to a solid rise in new business, in contrast to an official survey on Sunday that showed a sub-index of services activity shrank again at the end of 2023.
Minutes of the Fed's Dec. 12-13 meeting released on Wednesday showed a growing sense among policymakers that inflation was under control and rising concerns about the risks that «overly restrictive» monetary policy may pose to the economy.
«The Fed minutes suggest that many members endorsed the 'higher rates for longer' narrative, while those that projected rate cuts in 2024 viewed cuts coming later in the year,» said Qunicy Krosby, chief global strategist for LPL Financial (NASDAQ:LPLA).
Krosby said in an email the minutes underscored an «uncertain» policy path suggesting expectations for a rate cut in March may need to be ratcheted down further.
Markets are now pricing in a 70% chance of the Fed cutting rates
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