Asia-Pacific markets declined with previous gains to trade predominantly lower on Thursday, after the Federal Reserve’s third rate cut of the year.
The U.S central bank had lowered the Federal Funds rate by 25 basis points to 3.5-3.75 percent and indicated that it had finished its easing efforts for now.
In his post-meeting news conference, Fed Chair Jerome Powell said that the reduction places the Fed in a comfortable situation as far as rates are concerned.
Powell said that “We are well-positioned to wait and see how the economy evolves,” and also cited that President Donald Trump’s tariffs had increased inflation.
The U.S dollar index dropped to 98.54 on Thursday, which is the lowest it has been since October 21. The Nikkei 225 of Japan began the day on a positive note, though it dropped by 0.58 percent. Therefore, the Topix was also slipped to 0.52 percent.
The Kospi of South Korea was also on a downward trend that reversed to decrease 0.56 percent, and the small-cap Kosdaq declined by 0.36 percent. Meanwhile, Hong Kong’s Hang Seng index gained 0.1 percent, though the CSI 300 in mainland China dropped slightly.
The stock of ZTE Corp fell by over 5 percent following a report by Reuters that the Chinese telecom equipment maker ZTE Corp may be required to pay more than $1 billion to the U.S. government to settle allegations of foreign bribery.
Australia’s S&P/ASX 200 also remained in the downward trend. Besides Wednesday’s rate decision, the Fed made another announcement to restart buying $40 billion in Treasury bills, which will start on Friday. Short-term Treasury yields moved lower as a result.
In the statement, the central bank also stressed the weak labor market, removing language stating that it “remained low.” This is an indication that it is changing its priority to assist the economy rather than inflation.
In the U.S., the Dow Jones Industrial Average rose massively on Wednesday, with the Fed decision boosting the index 1.1 percent, and the S&P 500 surged 0.7 percent, and the Nasdaq Composite rose 0.3 percent overnight.
