Asia report: Markets mixed as investors digest Fed decision

Markets in Asia finished in a mixed state on Thursday, as investors digested the latest policy statement from the US Federal Reserve overnight, which saw the US central bank stand pat on interest rates.

In Japan, the Nikkei 225 was down 0.26% at 22,339.23, as the yen weakened 0.14% against the dollar to last trade at JPY 105.07.

Technology giant SoftBank Group rose 2.36%, while among the benchmark’s other major components, robotics specialist Fanuc was down 1.5% and Uniqlo owner Fast Retailing lost 0.74%.

The broader Topix index was 0.62% weaker by the end of trading in Tokyo, closing at 1,529.47.

In fresh economic data out of Japan, the country’s retail sales were down 1.2% year-on-year in June, according to the Ministry of Economy, Trade and Industry.

That was far better than the consensus forecast for a 6.5% fall, as polled by Reuters.

On the mainland, the Shanghai Composite was off 0.23% at 3,286.82, and the smaller, technology-focussed Shenzhen Composite was down 0.43% at 2,227.33.

South Korea’s Kospi was ahead 0.17% at 2,267.01, while the Hang Seng Index in Hong Kong was down 0.69% at 24,710.59.

The blue-chip technology stocks were mixed in Seoul, with Samsung Electronics closing flat, and chipmaker SK Hynix up 2.52%.

Investor expectations were sated by the Fed overnight, as the Federal Open Market Committee kept its interest rate targets at between 0% and 0.25%.

“As expected, the Federal Reserve maintained its dovish policy stance at this month’s meeting, as chair Jerome Powell painted a gloomy picture of the economy, emphasising that the global economy is faced with the most severe recession of our lifetime, that the path forward is ‘extraordinarily uncertain’ and that the most recent data points at a slower pace of recovery," said Swissquote Bank senior analyst Ipek Ozkardeskaya.

"Investors only heard that more stimulus is on the way."

Ozkardeskaya said markets were "back to those days" where bad economic news was perceived as good news, as deteriorating financial conditions meant more monetary and fiscal support, and a longer period of cheap liquidity, which could only result in a bigger balloon in equity prices.

“So, the irony is, the US GDP data should confirm a near 35% slump in the second quarter and the worse GDP read on record could have a further boosting effect on US and global equities.”

Oil prices were weaker at the end of the Asian day, with Brent crude last down 1.62% at $43.04 per barrel, and West Texas Intermediate off 1.77% at $40.54.

In Australia, the S&P/ASX 200 rose 0.74% to 6,051.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was ahead 0.8% at 11,692.02.

Both of the down under dollars were weaker on the greenback, with the Aussie last off 0.63% at AUD 1.4001, and the Kiwi retreating 0.59% at NZD 1.5084.