TOKYO: Asian stocks declined on Thursday after plunging oil value and the Federal Reserve’s reminder it is still on track to increase interest rates this year led to a miserable day on Wall Street.
The release of weaker-than-expected retail sales figures in Japan was another reason for gloom.
Japan’s Nikkei 225 slipped 0.9 percent to 17,644.31 and Hong Kong’s Hang Seng fell 1.1 percent to 24,588.54. The Shanghai Composite Index shed 1.4 percent to 3,257.88. South Korea’s Kospi was 0.4 percent lower at 1,954.55. Australia’s S&P 200/ASX added 0.3 percent to 5,569.50. Markets in Southeast Asia were mixed.
The Federal Reserve issued its first policy statement of the year, making clear that it would remain “patient” in raising interest rates from near zero, which was expected. But it also strengthened its assessment of the U.S. economy, noting it is expanding at a solid pace and generating strong job growth.
“The fact is no one knows when a rate hike will occur,” IG’s chief market strategist Chris Weston said in a commentary. “And, while the Fed would like to be in a position to raise, the lessons of 1938 still haunt them: raising rates too early caused the second leg of the Great Depression.”
The 0.3 percent month-on-month drop in Japan’s retail sales in December may just reflect weaker gas prices, but core spending was also sluggish during one of the busiest shopping seasons of the year, economists said. The data adds to doubts about whether Prime Minister Shinzo Abe’s policies to revive the long stagnant Japanese economy are delivering the goods.
A scathing report by Chinese regulators accusing e-commerce giant Alibaba of failing to prevent fake goods from being sold on its websites pushed its share price sharply lower. Further muddying the water was a disclosure that the report was delayed to avoid affecting Alibaba’s $25 billion New York stock market listing. Alibaba’s shares fell 4.5 percent Wednesday.
Investors puzzled through a barrage of signals from the Federal Reserve, oil markets and corporate America and stocks fell sharply for second straight day on expectations for an eventual interest rate hike. The Dow Jones industrial average lost 1.1 percent to 17,191.37 and the Standard & Poor’s 500 sank 1.4 percent to 2,002.16.
Benchmark U.S. lingered near six-year lows after the U.S. Energy Department reported oil inventories rose to their highest levels ever recorded. The contract was down 5 cents to $44.40 a barrel in electronic trading on the New York Mercantile Exchange. It lost $1.78 to close at $44.45 a barrel in New York on Wednesday. As recently as June, it traded above $100.
The dollar rose to 117.80 yen from 117.73 yen the previous day. The euro fell to $1.1266 from $1.1286.
