Asian stocks fell on Tuesday following a major speech by Chinese President Xi Jinping, tracking losses on Wall Street as traders braced for an interest rate hike by Federal Reserve.
Japan’s Nikkei 225 index
NIK, -1.61%
was 1.6% lower and the Kospi
SEU, -0.59%
in South Korea dropped 0.4%. Hong Kong’s Hang Seng
HSI, -0.90%
slipped 0.9%. The Shanghai Composite index
SHCOMP, -1.09%
dropped 1%, as did Australia’s S&P ASX 200
XJO, -0.90%
. Shares were lower in Taiwan
Y9999, -0.65%
and Southeast Asia.
Among individual stocks, Japan’s Fast Retailing Co.
9983, -1.85%
slid 1.7% and Korean chipmaker SK Hynix
000660, -1.61%
fell 2%, while Hong Kong-listed Tencent Holdings
0700, -2.33%
fell more than 2%. A number of Japanese industrial companies, such as Nippon Steel & Sumitomo Metal Corp.
5401, +0.75%
and Mitsubishi Materials
5711, +0.32%
, rose more than 1%, while CSPC Pharmeceutical
1093, +3.11%
was one of the few gainers in Hong Kong.
Investors had been anxiously awaiting a speech by Xi to commemorate the 40th anniversary of China‘s economic reforms. Some analysts were hoping Xi would announce new commitments to a free-market economy.
“China equities are parked in neutral as investors remain hopeful for a more proactive fiscal policy tone from mainland regulators at Chinas economic work conference,” said Stephen Innes, head of Asia-Pacific trading at Oanda, in a note to clients early Tuesday.
In his speech in Beijing, Xi called for China to “stay the course” on economic reforms, adding a defiant note that “no one is in a position to dictate to the Chinese people what should or should not be done,” an apparent job at the Trump administration’s efforts to force a trade deal.
Xi said economic reforms will continue, where needed. “We will resolutely reform what should and can be reformed, and make no change where there should and cannot be any reform,” he said.
He added that China has reached a point where it must move forward. “We will reinforce the development of the state economy while guiding the development of the non-state economy,” Xi said. “Opening brings progress while closure leads to backwardness.”
On Monday, broad selling knocked U.S. indexes to their lowest levels in over a year. Investors sold almost everything, from technology and retail stocks to steadier high-dividend companies. Less than 40 of the 500 stocks comprising the S&P 500
SPX, -2.08%
finished the day higher. The benchmark index gave up 2.1 percent to 2,545.94, its lowest level since Oct. 9, 2017. The Dow Jones Industrial Average
DJIA, -2.11%
skidded 2.1% to 23,592.98 and the Nasdaq composite
COMP, -2.27%
was down 2.3 percent at 6,753.73.
The Federal Open Market Committee begins a two-day meeting on Tuesday. It is expected to raise its short-term interest rate by a modest quarter-point, to a range of 2.25% to 2.5% a day later. Investors fear more monetary tightening would weigh on U.S. growth, and eventually, the global economy, that is already expected to slow in 2019 because of trade tensions. President Donald Trump tweeted that it was “incredible” the Fed was considering another rate hike, with “a very strong dollar and virtually no inflation.” The central bank forecasts three more rate hikes in 2019.
“Despite Donald Trump’s recent overture, the Fed looks set to hike rates again on Wednesday with market players anxious to see if the economy can handle more policy tightening given expectations for slowing growth,” ING economists Nicholas Mapa and Prakash Sakpal said in a commentary.
Oil prices fell on worries about oversupply and softening growth in China, which could hit demand. Benchmark U.S. crude
CLF9, -1.32%
shed 49 cents to $49.39 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.32 to $49.88 in New York on Monday. Brent crude
LCOG9, -1.38%
, used to price international oils, gave up 59 cents to $59.02 a barrel. It lost 67 cents to settle at $59.61 a barrel in London.
The dollar
USDJPY, -0.26%
weakened to 112.61 yen from 112.83 yen in late trading Monday.
Want news about Asia delivered to your inbox? Subscribe to MarketWatch’s free Asia Daily newsletter. Sign up here.
Source : MTV
