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Asian Stocks Down, Investors Continue to Digest “Hawkish” Fed Minutes

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By Gina Lee – Asia Pacific stocks were mostly down on Thursday morning, as investors continued to digest the minutes from the U.S. Federal Reserve’s latest meeting that indicated the possibility of faster asset tapering.

Japan’s Nikkei 225 rose 0.83% by 9:03 PM ET (2:03 AM GMT). South Korea’s KOSPI was down 0.55%, with the Bank of Korea hiking its interest rate to 1% as it handed down its policy decision earlier in the day.

In Australia, the ASX 200 edged down 0.16%.

Hong Kong’s Hang Seng Index was down 0.52%

China’s Shanghai Composite edged down 0.16% and the Shenzhen Component inched down 0.03%.

U.S. markets are closed for a holiday on Thursday.

The Fed’s minutes from its latest meeting, released on Wednesday, indicated that the central bank was open to speeding up the pace of asset tapering.

“Various participants noted that the Federal Open Market Committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate sooner than participants currently anticipated if inflation continued to run higher,” according to the minutes.

“These minutes were hawkish,” TD Securities global head of rates strategy Priya Misra told Bloomberg.

“The market has moved the timing of the first-rate hike now to June of 2022 which implies this earlier end to QE is already priced in. The market is going to struggle until we get more data.”

San Francisco Fed President Mary Daly also said it would be hard to argue against faster asset tapering if labor market and consumer prices data due in early December continue to be better than expected.

Alongside the Fed minutes, U.S. data released on Wednesday ahead of Thursday's holiday showed that the GDP grew 2.1% quarter-on-quarter in the third quarter. The data also showed that 199,000 initial jobless claims were filed throughout the week, the lowest level since 1969.

Across the Atlantic, Bank of England Governor Andrew Bailey will speak at a Cambridge Union event later in the day.

Meanwhile, events in Mexico are also on investors’ radars. President Andrés Manuel López Obrador nominated Victoria Rodríguez Ceja to head the Bank of Mexico, having withdrawn his previous nominee, former finance minister Arturo Herrera.

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