As data points to a faster Fed taper, most Asian markets fall.
As a result of a slew of positive economic statistics, Asian stock markets tumbled sharply on Thursday, raising concerns that the Federal Reserve may withdraw its massive financial support and raise interest rates sooner than expected.
A reduction in jobless claims to a five-decade low, combined with a boom in consumer income and spending, bolstered hopes that the world’s largest economy is on the mend, but increased pressure on the central bank to keep the economy from overheating.
The figures came as minutes from the Federal Reserve’s November policy meeting revealed that officials were moving closer to unwinding their massive bond-buying program, known as quantitative easing, at a faster pace in order to keep prices from skyrocketing.
While authorities decided to reduce the amount of bonds purchased each month beginning in November, the minutes stated that “several participants preferred a slightly faster pace of reductions that would result in an earlier finish to net purchases.”
They went on to say that if inflation continued to rise above levels compatible with the Committee’s objectives, the policy board would be willing to “increase the target range for the federal funds rate sooner than members now expect.”
Meanwhile, San Francisco Fed President Mary Daly, a typically dovish figure, is warming to the concept of a more rapid removal of stimulus. She also stated that she is “leaning towards” an increase in borrowing prices, adding that it “wouldn’t surprise me in the least if it’s one or two by the end of next year.”
The rise in global inflation has prompted numerous central banks to tighten measures put in place at the start of the recession, policies that have been a key driver of the global recovery and market bounce to record or multi-year highs over the last year and a half.
However, the Dow dipped marginally, and Asia followed suit.
In the red were Hong Kong, Shanghai, Sydney, Singapore, and Manila. The South Korean central bank’s move to raise interest rates for the second time also weighed on Seoul.
Tokyo, on the other hand, increased because to a strengthening of the dollar versus the yen, which benefits exporters, while Wellington, Taipei, and Jakarta also increased.
On Bloomberg Television, Priya Misra of TD Securities commented, “These minutes were hawkish.” “The first rate hike has been pushed back to June by the market. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.