By Gina Lee
Investing.com – Asian stocks were down on Thursday morning, with investors digesting the U.S. Federal Reserve’s policy decision alongside yet another U.S. tech stocks selloff during the previous session.
The Fed said on Wednesday that it would keep interest rates near zero until inflation is on track to “moderately exceed” its 2% inflation target “for some time”, aiming to correct years of weak inflation and the addition of as many jobs for as long as possible.
But Fed Chairman Jerome Powell did not offer further specifics on the central bank’s approach to monthly bond purchases, disappointing some investors expecting more details on plans for longer maturities. Powell also said that policy would continue to be accommodative but warned that the path towards U.S. economic recovery from COVID-19 “remains highly uncertain”.
Other Fed officials have also recently emphasized that recovery is highly contingent on better control of the COVID-19 virus, with over 6.6 million cases in the country as of September 17, according to Johns Hopkins University data. Another factor is the U.S. Congress’ ability to pass the latest stimulus measures to support jobs and incomes. The White House is signaling a willingness to increase the package’s price tag and is urging Senate Republicans to work with Democrats to seal a deal within the next week to 10 days, raising investor hopes for a long-awaited deal.
But some investors remained optimistic that further Fed stimulus measures would compensate even if Congress delays approving the package even further.
“Even with the risk of a delayed fiscal package, more fiscal support will be delivered and along with easy financial conditions and a low rate outlook for the next couple of years maintains a supportive backdrop for risk assets and downward pressure on the dollar,” JPMorgan (NYSE:JPM) Asset Management global market strategist Kerry Craig told Bloomberg.
Japan’s Nikkei 225 was down 0.66% by 10:50 PM ET (3:50 AM GMT). Yoshihide Suga was officially elected as the country’s new prime minister on Wednesday in a parliamentary vote and pledged to continue predecessor Shinzo Abe’s Abenomics policy. The Bank of Japan is also due to hand down its own policy decision later in the day.
South Korea’s KOSPI fell 0.81%.
In Australia, the ASX 200was down 0.86%. Data released earlier in the day showed a drop in August’s unemployment rate to 6.8% from July’s 7.5%, but also showed employment surging by 110,000 year-on-year against a predicted 35,000 drop.
Hong Kong’s Hang Seng slid 1.31%. China’s Shanghai Composite fell 0.80% while the Shenzhen Component was down 0.34%. U.S.-China tensions continue to simmer after U.S. President Donald Trump raised concerns on Wednesday over Oracle’s buyout of TikTok’s U.S. assets.