Singapore market trends Thursday: Wall Street tumbles as Fed comes in less dovish than expected

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Asia’s shares may stumble on Thursday, tracking another tumble on Wall Street, after the closely watched U.S. Federal Reserve statement on Wednesday came in less dovish than some traders had been speculating.

The Fed hiked interest rates by 25 basis points to 2.25 percent to 2.50 percent, as expected, on Wednesday, and signaled it would continue to gradually raise rates as well as continuing to cut its balance sheet.

“Policy does not need to be accommodative,” Fed chief Jerome Powell said, according to a Reuters report.

Chris Rupkey, chief financial economist at MUFG Union Bank, took the Fed’s comments as a sign that the central bank expected the economy to slow and rates wouldn’t be increased as much as originally expected, pointing to the forecast for 2019 economic growth of only 2.3 percent, down from a 2.5 percent forecast in September.

But he added, that markets were disappointed that the Fed was only slightly adjusting its course.

“The markets somehow thought interest rate futures would be correct and the Fed would announce they were done, finished, with no rate hikes next year,” Rupkey said in a note on Wednesday U.S. time. “If you really want to be disappointed, Mr. Stock Investor, the only reason that the Fed has less work to do on pushing rates higher, is because the economy is slowing faster than they thought. If the economic outlook is weaker in 2019, then so will be corporate profits which drive stock market valuations over the long term.”

Indexes

Japan’s Nikkei 225 opened down 0.91 percent, while South Korea’s Kospi was off 1.07 percent at 8:06 A.M. SGT.

Singapore’s Straits Times Index tacked on 0.43 percent to 3058.65 on Wednesday; December futures for the index were at 3059 on Wednesday, while January and February futures were at 3062 and 3064 respectively.

Hong Kong’s Hang Seng Index gained 0.20 percent to 25,865.391 on Wednesday, while China’s CSI 300 shed 1.19 percent to 3091.125.

Malaysia’s KLCI gained 1.24 percent to 1655.66, while Indonesia’s IDX Composite advanced 1.55 percent to 6176.09.

The Dow Jones Industrial Average dropped 1.49 percent to 23,323.66, the Nasdaq Composite tumbled 2.17 percent to 6636.827 and the S&P 500 shed 1.54 percent to 2506.96. Futures for the three indexes were higher in early trade.

Oil

Nymex WTI crude oil futures for February were up 2.08 percent at US$47.20 a barrel at 3:29 A.M. SGT, while ICE Brent crude futures for February were up 1.74 percent at US$57.24 a barrel at 6:58 A.M. SGT, according to Bloomberg data.

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