HONG KONG, March 23: Asian stocks fell sharply on Wednesday as investors picked up on heavy losses on Wall Street after the US Federal Reserve hit confidence with a surprise warning on the need to be vigilant against inflation, dealers said. They said the fact that the Fed hiked rates as expected by 25 basis points to 2.75 per cent and maintained that it would implement further increases at “a measured pace” could not hide the harder line taken on inflation.
Most took the warning to mean the Fed could be aiming to lift its key lending rate to 4.0 per cent and more by the end of the year as it seeks to head off cost pressures coming from record oil and raw materials prices. Since the bulk of the gains in all asset classes over the past several years had been made on the back of low interest rates, the outlook is suddenly much more uncertain and could see investors moving to limit their risk exposure.
Dealers noted that most of the markets fell from the opening and showed no sign, except in Taipei, of any significant rebound over the day.
The damage was widespread, with record-breaking Sydney unusually leading the losers with a fall of 1.44 per cent, the same as in Singapore, while Seoul fell 1.39 per cent and Hong Kong lost 1.25 per cent.
TOKYO: Japanese share prices closed 0.87 per cent lower after the US Federal Reserve shook up Wall Street with a warning on inflation, dealers said.
Investors also took profits ahead of a closely watched government survey of land prices, which as expected, did show a slight easing in deflation although the downturn in prices for 2004 was still large at five per cent.
The Tokyo Stock Exchange’s benchmark Nikkei-225 index lost 102.85 points to 11,739.12. The broader TOPIX index of all first section shares fell 8.67 points or 0.72 per cent to 1,193.85
Decliners led gainers 1,151 to 399, with 101 stocks unchanged on volume of 1.75 billion shares, up from 1.72 billion Tuesday.
The Fed, as widely expected, raised interest rates by a quarter point for the seventh straight time to 2.75 per cent but also warned that inflation was of increasing concern.
“Stock prices fell (in line with) Wall Street after the US Fed policymakers noted inflation risks,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
HONG KONG: Hong Kong share prices closed 1.25 per cent lower following overnight falls on Wall Street and on the prospects of local banks raising interest rates following a rise in the US, dealers said.
They also attributed the market’s fall to attempts by several fund managers to push down the benchmark index ahead of settlement of futures contracts on March 30.
The key Hang Seng Index closed down 172.86 points at 13,603.61, off a low of 13,564.61 and high of 13,643.99, on turnover 22.36 billion Hong Kong dollars.
The Hang Seng China Enterprises Index was down 95.86 points or 1.95 per cent at 4,811.31.
“Today’s sell-down was due mainly to the Dow’s falls overnight and attempts by several fund managers to pull down the index before they settle futures contracts next Wednesday,” Peter Lai, sales director at DBS Vickers Securities, said.
TAIPEI: Taiwan share prices closed flat as late bargain-hunting recouped early losses sparked by Wall Street’s heavy losses after the US Federal Reserve surprised investors with a clear warning on inflation, dealers said.
They said the main index recovered from an intra-day low under the key 6,000 points level as the electronics majors attracted interest after recent heavy losses.
The weighted index closed up 0.70 points at 6,019.49, off a low of 5,970.20 and a high of 6,023.76, on turnover of 62.86 billion Taiwan dollars.
Decliners led risers 442 to 405, while 170 stocks were unchanged.
“Technical support must be the reason behind the relative strengthening of the index towards the close,” Wilson Lien, a Jih Sun Securities Investment deputy manager, said.
However, given the whole host of external and internal uncertainties still weighing on sentiment, range bound consolidation would remain the scenario in the coming sessions, he said.
SHANGHAI: Chinese share prices closed 0.45 per cent lower, extending losses as speculation grew the authorities will launch further credit-tightening measures to cool the economy, dealers said.
They said the tone is increasingly negative after data showed the economy continues to bound ahead despite efforts to put it on a more sustainable track while top officials talk increasingly of the need for moderation.
At the same time, there have been no fresh measures to help the market despite hopes the government would come to the rescue during the recent annual meeting of parliament.
On the day, automakers were further hit after the government raised gasoline prices seven per cent while steel makers were weighed down by cost worries.
The Shanghai A-share Index fell 5.67 points to 1,260.75 on turnover of 7.73 billion yuan while the Shenzhen A-share Index was down 0.81 points or 0.26 per cent at 311.48 on turnover of 4.94 billion yuan.
The benchmark Shanghai Composite Index, which covers both A- and B-shares, lost 5.27 points or 0.44 per cent at 1,201.65 on turnover of 7.85 billion yuan.
SYDNEY: Australian share prices were down sharply, dropping 1.5 per cent in the market’s largest fall in two years on Wednesday as investors picked up on Wall Street’s alarm at the US Federal Reserve’s warning on inflation, dealers said.
They said the optimism that drove the market to successive record highs on Friday and Monday dried up as investors decided to take profits in response to US developments.
Overnight, the Fed hiked rates by an as expected 25 basis points to 2.75 per cent but also hardened up its language on inflation, badly surprising the stock markets.
The benchmark SP/ASX 200 closed down 63.0 points at its low for the day of 4,170.8 while the broader All Ordinaries Index lost 60.9 at 4,164.6.
Market volume was 1.33 billion shares worth 3.78 billion dollars, with 1,177 stocks down, 454 up and 405 steady.
Hudson Securities head of institutional dealing Ric Klusman said there was nothing to counter fears that rising interest rates in the United States and high oil prices will feed inflation and hobble global economic growth.
SINGAPORE: Singapore share prices closed 1.44 per cent lower on concerns over rising interest rates after the US Federal Reserve said it was more worried over inflation risks, dealers said.
The Straits Times Index was down 31.31 points at 2,145.10.
KUALA LUMPUR: Malaysian share prices closed 0.30 per cent higher due to bargain hunting on selected blue-chip stocks, dealers said.
The Kuala Lumpur Composite Index rose 2.62 points to 881.25, while volume was 589.69 million shares worth 994.44 million ringgit with gainers leading losers 419 to 298.
Dealers said the bourse was down on selling pressure in early trade due to forced selling but some late bargain-hunting recouped these losses.
“I am not surprised with the bargain hunting today, but I am afraid it will be short lived as foreign funds have not stopped their selling,” a local brokerage dealer said.
He said the central bank’s annual report might be able to provide short term leads to the market Thursday, and identified resistance at 895 points and support in the 868-870 points range.
BANGKOK: Thai share prices closed 0.90 per cent lower with investors concerned over capital outflows following a US interest rate hike and amid a weakening of the Thai baht, dealers said.
The Stock Exchange of Thailand (SET) composite index fell 6.27 points to close at 693.26, and the blue-chip SET 50 index was down 0.51 points at 48.22.
JAKARTA: Indonesian share prices closed 0.91 per cent lower on profit-taking after the US Federal Reserve increased interest rates while highlighting greater inflation fears, dealers said.
The Jakarta Stock Exchange composite index closed down 10.453 points at 1,142.148. Volume was 3.04 billion shares valued at 2.25 trillion rupiah. Losers led gainers 94 to 42, with 68 stocks unchanged.
“This was a technical correction, the index has been moving up rapidly and it’s overbought,” Prudence Asset Management analyst Didi Kurniawan said.
MUMBAI: Indian share prices closed 1.24 per cent lower in line with regional weakness after the US Federal Reserve hiked interest rates and warned of a rise in inflation, dealers said. The Bombay Stock Exchange’s 30-share Sensex index shed 80.99 points to close at 6,454.46.—AFP
