Most Asian Stocks Decline Amid Mixed Signals on US Interest Rates; Nikkei Drops on BOJ Speculation.
Asian markets saw mixed performance on Thursday as Federal Reserve officials provided conflicting signals on U.S. interest rates. While Wall Street initially reacted positively to Fed Chair Jerome Powell’s indication of rate cuts this year, comments from Minneapolis Fed President Neel Kashkari tempered the optimism, stating he anticipated no more than one or two rate cuts due to concerns over persistent inflation.
In response to Kashkari’s remarks, U.S. stock futures declined in Asian trade, exerting downward pressure on regional indexes.
Japanese shares, in particular, experienced a sharp decline from record highs amid speculation over a potential shift in the Bank of Japan’s (BOJ) monetary policy. The Nikkei 225 reversed early gains to trade 0.9% lower, with the broader TOPIX index also slipping 0.2%. Speculation mounted that the BOJ could end its negative interest rate policy as early as March, fueled by strong wage data for January.
Chinese stocks dipped as well, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes falling 0.3% and 0.1% respectively. Although stronger-than-expected trade data initially provided a boost, concerns over potential new U.S. restrictions on Chinese companies, such as WuXi AppTec, weighed on sentiment. This resulted in a significant decline in Hong Kong shares of WuXi AppTec and its affiliate WuXi Biologics, dragging down the Hang Seng index by 0.5%.
Overall, the passing of additional U.S. trade restrictions on Chinese firms raised fears of heightened trade tensions between the world’s largest economies, impacting broader Asian markets. Despite Australia’s ASX 200 edging up 0.1% and South Korea’s KOSPI slipping 0.2%, futures for India’s Nifty 50 index indicated a muted open following record highs on Wednesday.