Asia report: Markets fall after Fed rate decision; NZ avoids recession

by | Sep 21, 2023

(Sharecast News) – Markets across the Asia-Pacific region experienced a downturn on Thursday after the US Federal Reserve stood pat on interest rates overnight.
The US central bank said that while it would hold its benchmark policy rate, there were plans to raise interest rates again this year.

“Asian equity markets faced pressure following the Federal Open Market Committee’s hawkish pause, where the Fed’s dot plots indicated one more rate hike by year-end and fewer expected cuts next year,” said TickMill market analyst Patrick Munnelly.

“The Nikkei 225 slipped below the 33,000 handle as Japanese yields surged to decade highs; the Bank of Japan commenced its two-day policy meeting.

“Both the Hang Seng and Shanghai Composite followed suit with a decline, mirroring the cautious sentiment in regional markets.”

However, Munnelly said losses in the mainland were initially softened after the Chinese cabinet expressed its commitment to accelerating development in the advanced manufacturing sector.

“Resilience was also observed in developers after Guangzhou adjusted purchase rules for several districts.”

Bourses in the red across the region

In Japan, the Nikkei 225 decreased 1.37%, closing at 32,571.03, while the Topix ended the day with a 0.94% drop, settling at 2,383.41.

Among the major losers on Tokyo’s benchmark were Keisei Electric Railway, which declined by 4.52%, followed by Yaskawa Electric, which fell by 4.29%, and Eisai Co, which dropped by 4.02%.

China’s markets also felt the impact, as the Shanghai Composite went down by 0.77%, closing at 3,084.70, and the Shenzhen Component faced a decline of 0.9%, ending the day at 9,981.67.

Notable declines in Shanghai included Hanma Technology Group, which plummeted by 7.93% and Heilongjiang Transport Development, which decreased by 5.33%.

Over in Hong Kong, the Hang Seng Index reported a fall of 1.29% to close at 17,655.41.

Among the top losers were Alibaba Health Information Technology, with a 4.86% drop; China Resources Mixc Lifestyle, declining by 3.85%; and China Hongqiao Group, down by 3.72%.

South Korea’s Kospi didn’t fare much better, experiencing a drop of 1.75% to 2,514.97, as KakaoPay took a hit of 5.83%, and HYBE followed closely with a decline of 5.14%.

In Australia, the S&P/ASX 200 mirrored Japan’s performance with a decrease of 1.37%, closing at 7,065.20.

Mader Group faced the most significant loss, plummeting by 10.05%, while Block saw a decrease of 4.76%.

However, New Zealand’s S&P/NZX 50 showed relative resilience with a minimal dip of 0.05% to close at 11,318.74.

Nonetheless, Genesis Energy and Pacific Edge weren’t spared, dropping by 4.9% and 4.41% respectively.

On the currency front, the dollar was last down 0.33% on the yen, trading at JPY 147.85.

The greenback was meanwhile stronger than its Australasian counterparts, rising 0.62% against the Aussie to AUD 1.5605 and managing gains of 0.13% against the Kiwi to change hands at NZD 1.6890.

Meanwhile, Oil prices were weaker, as Brent crude futures dropped 1.07% on ICE to stand at $92.53 per barrel, while the NYMEX quote for West Texas Intermediate was down by 1.09%, priced at $88.68.

New Zealand’s economy exhibits stronger-than-expected growth

In economic news, fresh data from Wellington revealed promising growth in New Zealand’s economy, outpacing economists’ expectations.

The nation’s gross domestic product (GDP) for the quarter through June expanded 0.9%, a significant jump from the predicted 0.5% growth rate.

That growth was particularly noteworthy in light of the revised first quarter data, which saw a stagnant growth rate of 0.0% after the prior report indicated a contraction of -0.1%.

The revision confirmed that New Zealand narrowly avoided a technical recession, defined as two consecutive quarters of economic contraction.

Furthermore, when compared annually, GDP surged 3.2%, representing an increase from the prior quarter’s expansion of 2.9% and surpassing the 3.1% projection anticipated by Reuters polling.

Reporting by Josh White for Sharecast.com.

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