EQUITIES
Asia-Pacific markets declined on Thursday as investors digest an overnight update from the U.S. Federal Reserve.
In Tokyo, the Nikkei 225 fell 2.93%, touching its lowest point since Nov. 26, 2020. Hong Kong’s Hang Seng index fell 2.57% while the mainland markets also fell. The Shanghai Composite declined 0.88%.
South Korea's share market fell to its lowest level in nearly 14-months, leading Asia's emerging markets lower, as it dropped 3.03%. Australian shares retraced earlier gains with the ASX 200 fell 1.90%.
Markets elsewhere in South and Southeast Asia also sold off. India’s S&P BSE Sensex Index was down 1.50%, Singapore’s Straits Times Index fell 0.59%, and Indonesia’s Jakarta Composite declined 0.18%.
The Taiwan market is closed for a holiday on Thursday.
The broad drop in the Asian market echoed from a sharp reversal in U.S. shares overnight. All three major U.S. stock indexes whipsawed before closing that ended with the Dow joining the S&P in negative territory and the Nasdaq eking out a nominal gain. The Dow Jones Industrial Average fell 0.38%, to 34,168.09, the S&P 500 lost 0.15%, to 4,349.93 and the Nasdaq Composite added 0.02%, to 13,542.12.
OIL
Oil prices marginally changed on Thursday, with Brent remained elevated near $90 per barrel.
While a surge in the U.S. dollar and hawkish Fed’s FOMC meeting outcome dragged the prices down slightly, continued tight supply challenges and mounting Russia-Ukraine tensions that has fanned fears of disruptions of natural gas to Europe continue to support crude oil prices.
An increase in crude oil and gasoline inventories in the U.S., alleviated some of the concerns about supply. In a data by the Energy Information Administration (EIA) on Wednesday, crude inventories rose by 2.4 million barrels in the week to Jan. 21 to 416.2 million barrels, compared with expectations for a 728,000-barrel drop. Gasoline stocks rose by 1.3 million barrels last week to 247.9 million barrels, the most since February of 2021.
The Brent now traded at $89.24 per barrel, and the U.S. crude futures traded at $86.60 per barrel.
Both benchmarks rose 2% overnight, with the Brent futures ends at $89.96 a barrel, while the WTI crude oil prices closed to $87.35 per barrel.
CURRENCIES
U.S. Treasury yields rose as the Fed issued its update. The U.S. Treasury 2-year yields hit their highest level since February 2020. The benchmark U.S. 10-year yield climbed to 1.853% from 1.846% Wednesday's close.
The U.S. dollar index, which tracks the greenback against a basket of its peers, last traded at 96.651, at a three-week high.
GOLD
Gold slipped on Thursday, continuing a sharp drop in the last session, as U.S. dollar and Treasury yields gain on interest rate hikes signal by the Fed.
Spot gold shed 0.26% to $1,814.70 per ounce, after closing 1.6% lower on Wednesday in its worst session since Nov 22. U.S. gold futures fell 0.84% to $1,814.40.
ECONOMIC OUTLOOK
Asian shares fell across the board on Thursday as investors reacted to an overnight update from the U.S. Federal Reserve that signalled plans to steadily tighten policy. At the same time, rising concerns over political tensions between Russia and Ukraine also exacerbated worries.
In its latest policy update on Wednesday evening U.S. time, the Fed struck a somewhat hawkish tone, flagging a rate increase in March, as has been widely expected, and reaffirmed plans to end its bond purchases that month before launching a significant reduction in its asset holdings. The Fed also warned that inflation remains above its long-run goal and supply problems are bigger and more long-lasting than previously thought.
Growing tensions of Russian and Ukraine added to a risk-averse environment for investors. The U.S. on Wednesday said it had set out a diplomatic path to address sweeping Russian demands in eastern Europe, as Moscow held security talks with Western countries and intensified its military build-up near Ukraine with new drills.
