HONG KONG- Asian shares fell on Thursday while the dollar reached multi-month highs against peers, after minutes from the US central bank’s last meeting showed the increasing prospect of reduced monetary stimulus this year.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.63 percent, heading back towards 2021 lows set last month, with Chinese blue chips down 0.21 percent, Australia falling 0.54 percent and Hong Kong 0.45 percent off 0.45 percent.
Japan’s Nikkei dropped 0.37 percent.
Carlos Casanova, senior Asia economist at UBP, said the main drivers for markets this week were weaker economic activity data in China, which had prompted many economists to downgrade forecasts, the situation in Afghanistan and the Fed minutes.
The minutes from the July policy meeting published Wednesday fleshed out the Fed’s thinking on when to taper its monthly bond purchases, and showed officials expected they could ease stimulus this year if the economy continues to improve.
However, officials noted the spread of the COVID-19 Delta variant could temporarily delay the full reopening of the economy and restrain a jobs market that looms large in the Fed’s thinking.
“The minutes show a Fed that is pretty split on most things, but recognizes that we are getting much closer to the point of tapering,” wrote ING analysts in a note.
Focus now shifts to the Fed’s annual research conference in Jackson Hole, Wyoming, next week for any read about the central bank’s next steps.
“We will have more visibility about the outlook for the US 10-year yields from September onwards, there are some upside risks that they could go to 1.6 percent to 1.8 percent from the current levels, and for Asia Pacific that means outflows,” said Casanova. — Reuters
