Asian stocks follow Wall St lower as stimulus hopes fade

By: |
October 15, 2020 11:16 AM

The Federal Reserve has indicated that it will keep interest rates at nearly zero for a while to support the economy, even if inflation hits its target level.

sensex, nifty 50The impressive and better-than-expected corporate results for Q2FY21 have prompted analysts to upgrade earnings estimates.

Asian stocks followed Wall Street lower on Thursday as hopes US leaders will agree on a new economic stimulus before the Nov 3 presidential election faded.

Benchmarks in Shanghai, Tokyo and Hong Kong declined. Sydney advanced.

In Seoul, the company that manages boy band BTS made its market debut amid criticism by Chinese internet users after the group’s leader thanked Korean War veterans for their sacrifices.

Big Hit Entertainment Ltd.’s share price more than doubled by mid-morning. But Seoul’s Kospi still fell 1 per cent, to 2,346.45.

Wall Street’s benchmark S&P 500 index closed down 0.7 per cent on Wednesday after Treasury Secretary Steven Mnuchin said he and congressional leaders were “far apart” on new aid for the struggling U.S. economy.

Consumer spending, the main US economic engine, weakened after earlier additional unemployment benefits expired.

Mnuchin “added another nail to the coffin on pre-election stimulus,” Jingyi Pan of IG said in a report.

The Shanghai Composite Index lost 0.1 per cent to 3,337.51 and the Nikkei 225 in Tokyo fell 0.5 per cent to 23,517.63. The Hang Seng in Hong Kong lost 1.2 per cent to 24,370.76.

The S&P-ASX 200 in Sydney gained 0.8 per cent to 6,230.10. New Zealand, Singapore and Jakarta also retreated.

Thailand’s benchmark lost 1 per cent after the government declared a “severe state of emergency” following a rally Wednesday of thousands of protesters demanding democratic change, the third major gathering by activists.

Thai police dispersed a group of pro-democracy protesters early Thursday who had camped out overnight outside the office of the prime minister to demand his resignation. Police said they had arrested 20 people.

Mnuchin and Nancy Pelosi, the speaker of the House of Representatives, talked by phone Wednesday but reached no agreement, according to Pelosi aide Drew Hammill.

Mnuchin said it would be difficult to complete an agreement before next month’s presidential election.

On Wall Street, companies that rely on consumer spending, banks and technology and communication stocks bore the brunt of the selling.

The S&P 500 fell to 3,488.67. The Dow Jones Industrial Average lost 0.6 per cent to 28,514. The Nasdaq composite slid 0.8 per cent to 11,768.73.

Investors are swinging between optimism about a possible coronavirus vaccine that helped to propel an earlier market rally and unease about lackluster US economic activity.

Major US companies have begun reporting quarterly earnings this week.

Bank of America sank 5.3 per cent after its revenue fell short of analysts’ forecast. Wells Fargo dropped 6 per cent after its earnings were lower than Wall Street expected.

The Federal Reserve has indicated that it will keep interest rates at nearly zero for a while to support the economy, even if inflation hits its target level.

In energy markets, benchmark US crude gained 7 cents to $41.11 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added 6 cents to $43.38 per barrel in London.

The dollar gained to 105.26 yen from Wednesday’s 105.15 yen. The euro declined to $1.1750 from $1.1753.

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