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Asian markets fall after Fed minutes suggest rate rise | |
(35 minutes later) | |
Asian stock markets are trading in negative territory after the latest minutes from the Federal Reserve indicate the US could raise interest rates later this year. | |
The US Federal Reserve said it would raise rates in June if conditions were right. | |
South Korea's Kospi is down 0.2%, as is Australia's S&P/ASX 200. | |
In Greater China, Hong Kong's Hang Seng fell 0.9% but the Shanghai Composite is up 0.3%. | |
According to analysts, the market believes the probability of a rate hike in June has now increased to 32%. | According to analysts, the market believes the probability of a rate hike in June has now increased to 32%. |
"The minutes cited the strength of the labour market, improving economic conditions, better inflation and declining global risks as reasons to begin to normalise sooner than the market expected," Alex Furber from CMC Markets said. | "The minutes cited the strength of the labour market, improving economic conditions, better inflation and declining global risks as reasons to begin to normalise sooner than the market expected," Alex Furber from CMC Markets said. |
"The prospect of higher rates and the market's reliance on monetary policy to prop up asset prices worried investors, which pared early gains on the news." | "The prospect of higher rates and the market's reliance on monetary policy to prop up asset prices worried investors, which pared early gains on the news." |
However, Japanese shares rose after the yen weakened about 1% against the US dollar following the minutes. | |
The benchmark Nikkei 225 index rose 0.7% and the broader Topix gained 0.6% in early trading. | |
Data showing that Japanese machinery orders rose in March also helped sentiment. | |
Core orders rose by 5.5% from the previous month, beating forecasts for growth of 0.5%. | |
Shares of Japan's Suzuki Motors are also bouncing back from yesterday's sell off. | |
They rose by 5% in Tokyo after the car maker denied they manipulated fuel efficiency data. | They rose by 5% in Tokyo after the car maker denied they manipulated fuel efficiency data. |
Suzuki stock fell by as much as 15% on Wednesday on reports the firm may have done "improper" testing. | Suzuki stock fell by as much as 15% on Wednesday on reports the firm may have done "improper" testing. |