Asia report: Most markets fall as investors eye Fed, BoE

Most markets in Asia fell on Thursday, as investors digested news from the US Federal Reserve, which chose to stand pat on interest rate targets after its latest two-day meeting on Wednesday.

In Japan, the Nikkei 225 was up 0.53% to settle at a fresh 21-year high of 22,539.12, as the yen grew 0.06% stronger on the dollar to last trade at JPY 114.11.

Honda stock finished the day up 5.2% in Tokyo, after it raised its operating profit expectations for the full year through March to JPY 745bn, from previous forecasts of JPY 725bn.

It put the improvement down to positive sales movements in China.

On the mainland, the Shanghai Composite was down 0.38% at 3,383.14, and the smaller, technology-heavy Shenzhen Composite was off 0.67% at 1,989.98.

South Korea’s Kospi fell 0.4% to 2,546.36, while the Hang Seng Index in Hong Kong was down 0.26% at 28,518.64.

Blue-chip technology plays were among the losers in Seoul, with Samsung Electronics off 0.28% and SK Hynix sliding 2.23%.

Attention was very much stateside earlier in the Asian day, after the Federal Reserve met market expectations late on Wednesday by keeping its interest rate targets unchanged.

The central bank was not overtly clear as to when it was looking to next raise rates, although markets took its positivity on the economy as an indicator that the door was very much open for a December hike.

According to the CME Group’s FedWatch tool, the likelihood of a rates rise in December was still topping 98% early on Thursday.

The swirling rumours as to who President Trump would pick to succeed Janet Yellen as chair of the central bank also continued, as the Wall Street Journal quoted an unnamed source as saying the Donald was throwing his support behind Fed Governor Jay Powell.

Trump was expected to formally announce the appointment later in the global day.

US tax reform was also on the agenda, after the expected unveiling of a bill from House Republicans on Wednesday was delayed by a day for unknown issues.

Attention was also looking across the Atlantic to the UK, where the Bank of England was expected to raise interest rates for the first time in 10 years later on Thursday - though not everyone was convinced that would be the case.

“The market is pricing in a 90.4% chance of a hike,” noted BK Asset Management managing director of forex strategy Kathy Lien.

“But we're not so sure that the BoE is ready to move, especially given the larger trade deficit, recent weakness in manufacturing activity, retail sales and slowdown in CPI growth.”

Oil prices were steady during Asian trading on Thursday, although they turned weaker as Europe took the trading baton, with Brent crude last down 0.65% at $60.10 per barrel and West Texas Intermediate off 0.22% at $54.18.

In Australia, the S&P/ASX 200 slipped 0.1% to 5,931.71, with solid gains in the energy and mining sectors offset by losses in the hefty financials subindex.

National Australia Bank was down 2.83% by end-of-play in Sydney, after the firm reported full-year profit for the year to 30 September of AUD 6.64bn.

The bank - one of Australasia’s ‘big four’ - also said it was anticipating a 5%-8% uptick in expenses for the 2018 financial year, with around 4,000 jobs set to be “impacted” by ongoing efforts to automate.

Miners were among the winners in the sunburnt country, with Atlas Iron leaping 12.5%, Fortescue Metals adding 4.06% and Rio Tinto up 3.33% after a decent improvement in iron prices on Wednesday.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 added 0.4% to close at 8,083.06, led higher by infant food and dairy products exporter A2 Milk, which added 6.1% as it recovered from a major dip on Wednesday.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.29% at AUD 1.2990 and the Kiwi advancing 0.14% to NZD 1.4503.